The Equity Release Council’s David Burrowes reckons the later life mortgage industry could learn from how equity release advisers deal with and advise potentially vulnerable customers.
Burrowes, chairman of the council, highlighted the FCA’s April 2017warning that any customer can be become vulnerable at any time in their life, for example through serious illness, bereavement or loss of income.
He said: “The FCA expects them to pay attention to possible indicators of vulnerability and have policies in place to help consumers where those indicators suggest they may be vulnerable.
“In the equity release market consumers can only take out an equity release product via a qualified and regulated financial adviser after undergoing a thorough suitability assessment, and considering potential alternatives before receiving a recommendation.
“This is the case regardless of whether the customer is taking out a plan via the phone or face to face.”
He added that all customers of council members are guaranteed face-to-face advice from an independent legal professional before they can take out a plan.
Meanwhile the council recommends for advisers to suggest thatcustomers speak to their family and any other material beneficiaries of their will before taking out an equity release plan.
Burrowes added: “It is worth considering whether more customers of later life products would benefit from similar support.
“In the mortgage market alone, the range of later life products has increased significantly in recent years, but currently it is only the lifetime mortgage route that guarantees independent, face-to-face legal advice to protect consumers.”
He went onto say the FCA is expected to consult further on guidance for firms on the identification and treatment of vulnerable consumersin 2019, while he pledged that the council and its members will play an active role in sharing its experience as part of this process.
Face to face advice is king
The consensus among equity release advisers is advice can be given by phone, but face to face is always better when it comes to identifying vulnerable customers.
Gary Webster, head of partnerships at Equity Release Supermarket, said: “It is important to be aware that consumers of all ages are potentially vulnerable due to their individual personal circumstances.
“Firms should have policies, processes and training in place to identify vulnerable customer risk factors and take appropriate steps to ensure there is no detriment.
“We offer all customers a face to face meeting, however providing them with a choice, means that they may feel comfortable with advice over the phone or they may prefer a combination of both business interactions.
“Whichever way customers choose to take their advice, they must have a formal face to face consultation with their own independent solicitor.”
Will Hale, chief executive of Key, said that Key offers guidance and advise through online and paper-based resources, over the phone, via video technology and/or face-to-face – but most people want some face to face contact at least at some stage of the process.
He said: “Vulnerability can stem from age, financial difficulty, cognitive decline and emotional distress to name but a few triggers.
“Taking this holistic view and identifying vulnerable customers is a high priority and once a customer has been identified as being vulnerable it is essential that we are able to support them.”
Hale said that if a client has been identified as vulnerable, a Key adviser will always be accompanied by a colleague in all of their subsequent interactions with the customer.
This colleague will most likely be one of its specially trained vulnerability champions, which Hale claimed can offer expert guidance to ensure the right outcome is achieved.
He added: “Delivering the advice face-to-face also isn’t in itself a solution but we certainly feel it is imperative that every customer at least has this as an option as they consider equity release – irrespective whether they are vulnerable or not.”
Simon Chalk, managing director of Laterliving now!, added: “Where vulnerability is present or there’s a risk of it face to face advice will always be better than advice on the phone and should be offered.
“But some can be dealt with remotely on the phone so I don’t think you can make face to face advice mandatory in the equity release market. It’s too subjective.”