Firstly, may I wish you all a very Happy New Year and welcome to 2022.
Given what many of us will have gone through over the past few weeks – I’m suspecting many advisers had their holidays interrupted in some way by Covid – it does feel like something of a new beginning, and it’s to be hoped that we have a greater degree of normality from now on.
I am, however, conscious that we have all been saying this for close to two years now and, just when we might think we are getting to more solid ground we have the rug pulled from beneath us.
But let’s focus on the positives here, those things we can control and what we might be able to achieve as a result of exerting that control.
With that in mind, I’d like to look forward to the year ahead and look at a couple of later life lending issues which might result in a more positive 12 months of business activity.
Firstly, let’s reflect on 2021 which I think we’d say was a good year for the sector. From our own perspective as a distributor in the later life market, we hit some significant milestones, not least the fact that by year end, over £1.1bn of lending had been placed through Air.
This was not just equity release business but all types of later life lending which signals a number of things – firstly, the growth in the sector beyond equity release but also, for us as a business, the fact we are the number one distributor in this market. A position we do not take lightly and one we are continually working on to maintain.
That is important for advisory firms because they want their distribution partners, not just to be fully aware of their wants and needs now, but to also have one eye on the future, the growth achievable, the opportunities to be accessed, and the resources that are going to be increasingly required in order to maintain business growth and profitability.
From that perspective, within the Group we believe there are some major gains to be achieved particularly in terms of technological improvements around the advice, lending and underwriting processes. Let’s be fair, the system gains that are just a natural part of the mainstream mortgage market are still not ‘business as usual’ within later life lending, particularly equity release.
Utilising the technology available to speed up, what is still a very manual-based underwriting process, has to be a key aim for us. The somewhat frustrating thing is that everything is already in place to do this – we just need to join up the tech with the adviser and lenders/providers and we will be there. At the moment there is piecemeal take-up here but if we can get more businesses to the point of hitting the ‘Go’ button, then there are undoubtedly huge time savings to be had, and therefore administrative efficiencies to be enjoyed. That has to be an achievable goal during 2022 and if we can get most of the market to this point then it will be cause for celebration.
In other related matters, I hope 2022 comes to be defined as the year when the provision of later life lending advice became a ‘norm’ for intermediary firms. From my perspective, advisers are already recognising the increase in demand and what may be fuelling this, they now need to look at later life solutions in the round. However, I also appreciate that we may not have the best system to seamlessly get them to this point.
I have become something like a broken record in terms of highlighting the problems inherent in our silo system split between equity release, RIO and traditional residential mortgage options for older borrowers, but that’s only because it remains deeply problematic and therefore requires action.
This should all be about later life lending advice focused on the needs of customers who may (or may not) require these solutions. How can you determine the true solution if you are only looking at one product sector? It can’t be done, and therefore I’ll keep banging this particular drum for action in this area, whether that be advisers, firms, distributors, networks, providers or (lest we forget) the regulator itself.
I appreciate the latter may have quite a lot on its plate, but later life lending need is not going to fall back. This is becoming a more important sector and product option every single day, and we need a system and process which ensures we can deliver the best consumer outcomes each and every time.
That being the case, I have very high hopes for the sector, for advisers activity within it, and the growth in the number of clients they are supporting, during the rest of the year and beyond. If the environment can be shifted to something which reflects the needs of all of the above, then the future looks even better for all stakeholders.
Stuart Wilson is CEO at Air Group