Is the advice stage too late in the customer journey to fix Equity Release’s reputational issues? Probably, argues Tom Brett, Head of Mortgage and Lending at Contact State.
Equity Release’s reputational issues are well documented, and some argue, well founded. Miss-sold products in the 90s and 00s are coming to term now with interest rates very often over 7% and prohibitively high early repayment charges in tow. These bad press stories were inevitable with an unregulated product, with no need of additional qualifications to sell them and no governing body to ensure a code of conduct from its brokers and lenders.
Thankfully, much has changed since this period, and nothing proves this more than when the high street tentatively dip their toes back into the later life lending market place.
Now Lifetime Mortgages are regulated by the FCA, advisers need an additional qualification on top of their mortgage certificates to advise on these products and the FCA have made moves to ensure that ‘dabbling’ doesn’t occur from advisers who do the odd case every couple of months. With over 700 different plans available, it really is a full-time job making sure you can offer the correct advice to customers. One fantastic change is the governing body The Equity Release Council (formally SHIP) implementing their rules and principles for advisers and lenders alike. Ensuring customers have access to sound advice, and flexible, customer centric products, really has laid a solid foundation on which to build Equity Release’s reputation.
This, in turn, along with greater competition, pushed the lenders to start to build genuinely competitive products. Interest rates under 3%, flexible payment options and more bespoke underwriting moving these plans closer to standard mortgages has helped to bring later life lending into the mainstream.
However, we’re still seeing a reputational issue with Equity Release which is holding up growth in this market place. Anyone who has placed advertising for Equity Release on social media sites like Facebook, will know that some of the comments show that we’re still fighting the damage done 20/30 years ago.
So how we can we improve the image of Equity Release further? The improvements listed above have been fantastic in building a foundation of trust but more needs to be done. Arguably, when a customer has sat down with an adviser, they have decided they are comfortable with Equity Release’s image, the improvements need to start from the first enquiry online. Advertising that suggests Equity Release as a ‘new benefit’ or leaning on ‘tax free’ as a tag line only compound the customer’s view that this is all a con, and a trick. And worst of all, calculators promising an instant quote whilst capturing customer data and failing to give the customer the information they want, damage all the hard work being done further up the customer journey.
Only by having full oversight of the customer journey, and holding advertisers to a higher standard, can we remove this negative element in the marketplace and improve the customer’s perception of Equity Release. By insisting on real time certification of all leads, advisers and brokers can improve the advertising their customer’s see, enhancing the consumer journey, and in turn, improving the overall perception of Equity Release.
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