Firms referring customers for later life lending advice must place greater focus on best practice standards to ensure good customer outcomes, according to Key Partnerships, the referral and partnerships business of Key Group.
The continuing effects of Consumer Duty obligations and the FCA’s Later Life Mortgage Market Study are highlighting the need for mainstream mortgage brokers as well as IFAs and wealth managers to offer holistic propositions including access to later life lending solutions through referral partnerships or by advising themselves.
However, Key Partnerships is warning that too many do not understand what best practice standards to look for when selecting a referral partner and stresses that they should include prioritising customer outcomes as well as transparency and robust oversight.
The crucial point for any referral relationship is clear focus on customer understanding and ensuring suitable advice is provided. This means all relevant solutions are considered and discussed – including later life lending options such as lifetime mortgages.
The referral partner should complement the referring firm’s core proposition, enabling advice to be delivered holistically and in line with good customer outcomes.
Referral partners need to demonstrate comprehensive adviser training and ongoing competency standards as well as quality assurance and robust oversight processes, Key Partnerships says.
Advice should begin with a clear exploration of the customer’s needs and objectives, before moving to solutions. This includes full explanation of risks, benefits and long-term implications, with appropriate consideration of affordability and alternative options.
Introducers should also ensure their referral partner actively checks customer understanding and encourages involvement from family members where appropriate.
Above all, advice must be demonstrably tailored, with recommendations clearly linked back to individual circumstances and delivering fair, evidence-based outcomes in line with Consumer Duty expectations.
“Building a referral partnership with a specialist later life adviser is often the sensible path for firms looking towards delivering holistic advice but with gaps in their core offering. However, firms need to be confident in their partner. Deep experience and expertise in the fast-growing market are essential.
Later life lending can be complex and nuanced which means partners need to be able to provide genuinely independent, whole-of-market advice.
With many new entrants emerging, working with an established referral partner with long-standing expertise in later life lending can help reduce risk and ensure consistent standards.
The referral relationship must work for both the adviser firm and their client. Firms should be able to remain as involved as they wish, while maintaining and strengthening the client relationship.
A referral relationship with a trusted partner such as Key Partnerships can support the development of new income streams and help deliver good customer outcomes aligned to Consumer Duty obligations.”
Damon O’Connell, Director at Key Partnerships
More information about Key Partnerships can be found here
