30th November 2020
With social distancing measures looking likely to remain in force for the foreseeable future, the need for financial service providers to adapt to current circumstances and to cater to the requirements of customers at a time of unprecedented disruption has become essential. Yet, easy answers remain limited. In last month’s article, we discussed the pivotal role that equity release could play in enabling retirees and elderly property owners to access vital sources of revenue during the coronavirus crisis and the steps taken by the Equity Release Council (ERC) to ensure that product safeguards are maintained throughout this period. The results of this consultation process were duly published at the beginning of April, with a coalition of mortgage providers, funders, financial advisers and legal representatives agreeing to a temporary modification of legal advice rules- a move which has received widespread support from the independent consumer and regulatory bodies that comprise the ERC’s Standards Board and beyond. These measures, which will remain in force for the duration of the government’s lockdown, will allow clients to access legal advice remotely, with advisers offering a combination of written advice and documented video or telephone conference calls to establish the identity of clients, determine whether they have the mental capacity to enter into a given contract and ensure that they have not been subjected to any duress or coercion. The revisions will also allow clients to sign mortgage deeds in the presence of an independent adult witness of their choosing (subject, of course, to the usual identity checks and due diligence precautions), thereby allowing the ER industry to continue offering their services at this crucial time while ensuring that transactions are subject to the stringent legal standards enshrined within the ERC’s guidelines. Moreover, in cases where sufficient checks cannot be carried out, applications will be suspended until existing social restrictions are lifted, meaning that the best interests of customers are maintained and protected. In short, a collaborative triumph.
Indeed, there can be little doubt that this package represents a clear victory for both principles of common sense and the needs of vulnerable customers at a time of great uncertainty, delivering a timely and considered response to an era defining event while also allowing for innovations that can be used to maintain service standards across the sector- a perfect example of the adaptability that financial providers should be prioritising. For example, some lenders (such as Aviva, Canada Life, More2Life and OneFamily) have sought to overcome current restrictions on movement by revising their valuation policies, with remote appraisals being used to support client applications in some cases and semi-automated procedures involving desktop or drive-by valuations by surveyors with a detailed knowledge of local areas in others. In addition, suppliers such as LV= are attempting to encourage an uptick in ER business amongst advisers by simplifying their applications process, allowing for claims which would normally require a customer’s signature to be accepted via email confirmation or telephone- a fantastic boon for businesses and customers alike.
Yet, while measures such as these are being implemented as a matter of necessity, there is also an argument to suggest that some of the features which are being introduced at this time could help to augment or to reorder business practices in the years to come- redefining the way in which customers and suppliers interact while bowing to the needs and preferences of a changing society. Indeed, recent research by the digital services adviser Abaka and ER provider Key has suggested that digital technology is likely to play an increasingly vital role in the way that elderly clients research ER options, with a significant proportion of the customers that were surveyed as part of the report (all of whom were aged between 65-75) expressing a preference for provider websites and AI-powered chatbots to gauge the suitability of ER options and product choices. Moreover, the research has also concluded that clients are becoming less inclined to provide personal details or to enter into contact with an adviser at the early stages of an investigation, preferring the sense of anonymity and lack of judgement that a purely digital approach can offer in the short-term, while also compensating for a dearth of intermediaries who are actually qualified to advise on ER in the first place. Face to face advice continues to be regarded as a fundamental part of the application process by most consumers and there is little evidence to suggest that an end-to-end digital process is favoured by all but a minority. However, if we are to accept (as the report asserts) that technology is set to assume a growing influence amongst age groups that are traditionally seen as being resistant to such tools, then some of the measures taken at this time may be compatible with such an outlook (allowing for the primacy of face-to-face legal advice of course). In other words, necessity really is the mother of invention.
Either way, the ER sector can be justifiably proud of what is has achieved over the past few weeks, with the steps that have been taken acting as a clear example of what can be accomplished when an industry pulls together. Moreover, recent figures from the UK’s largest ER broker, Age Partnership, have revealed a jaw-dropping 13% monthly increase in the number of customers requesting quotations during March. So, the demand is undeniably there. But, businesses can only profit from this upsurge if they learn to adapt to their circumstances and take the necessary actions.
