Advisers want more resource to deal with vulnerability

Equity release lender more2life has published a report examining into adviser and consumer attitudes to the fair treatment of vulnerable customers.

It coincides with the end of the FCA’s consultation on vulnerability, which ends today (30 September).

When more2life asked homeowners aged 55 and over how they would react if their adviser offered them support because they thought they were vulnerable, 74% said they would be comfortable with this.

However, even though the majority of older homeowners would welcome additional support in this area, 19% said they do not need any help and 21% said they would only welcome this assistance if it did not slow down the application process.

In addition, 27% said they would question why their adviser thought they, or a family member, are vulnerable, while just 8% would be ‘upset’ at being regarded as vulnerable when they are not.

More2life’s research also found that 30% of homeowners over the age of 55 have felt vulnerable when making a financial decision. Moreover, the likelihood of vulnerability is thought to increase as people age, with 40% of homeowners agreeing that, as people get older, they are more likely to be vulnerable. Feeling vulnerable was also more common among women over 55 (32%) than men (28%).

As part of the FCA’s wider ambitions to support vulnerable customers, it has also proposed introducing a duty of care for those advisers helping these customers (i.e. a legal obligation for advisers to act in the best interest of their clients and exercise reasonable care and skill when providing a product or service). More2life’s research suggests that the majority (82%) of advisers support this although many believe that this should already be part of a firm’s approach.

81% of advisers believe there is a need for greater education and more resources to provide them with practical guidance on how to spot the signs and deal with vulnerable clients. In addition, 73% felt that there was more the industry could do to make equity release literature clearer and easier to understand.

The research has been taken from more2life’s new report, ‘Who are you calling vulnerable?’, which explores consumer and adviser sentiment on how the equity release market is supporting vulnerable customers.

Dave Harris, CEO of more2life, said: “Vulnerability is a tricky topic for advisers and lenders as while we are committed to supporting people who need additional help, clients may very well not identify themselves as being vulnerable.  So the challenge becomes helping them make the right financial choices for both the short and the long term while at the same time encouraging them to realise they may be vulnerable and that this is entirely okay.

“Today’s research suggests that three-quarters of older homeowners would welcome support if they were vulnerable which should act as a reassurance to advisers as they have these conversations with their clients.  That said, there is still a disconnect between believing that vulnerable people need more support and being vulnerable themselves so advisers are keen for more resources and tools to help with these tricky conversations.

“As a responsible lender, we are committed to making sure our customers are making the right decisions for the right reasons and supporting advisers in recognising vulnerability. It is for this reason that we strongly welcome the FCA’s guidance on vulnerability to ensure the best outcomes for customers in the equity release market.”

Will Hale, CEO at equity release advisory firm, Key, added: “Knowing how to identify and support vulnerable customers is a crucial part of any financial adviser’s role. However, it is arguably even more important in the later life lending arena when the average customer is over 70 and the decisions made can impact choices around care, inheritance and long term-financial wellbeing.

“This new report by more2life deals with the elephant in the room for many advisers as it can be awkward explaining to a customer that you feel they should be considered vulnerable when they may not view themselves as such. Today’s report suggests that most customers would welcome having these conversations which should encourage more advisers to address this subject head on.

“At Key, we place customers at the heart of what we do and we have robust processes in place to protect those that are vulnerable. That said, we are also aware that there is always room for improvement so we are delighted that the FCA is consulting on this issue so that the sector can ensure that all customers receive support appropriate to their individual circumstances.”

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