Stuart Wilson is corporate marketing director at more2life
Since the start of the coronavirus crisis, the later life lending industry has worked hard to ensure that it remains open for business, with lenders and advisers making great strides in overcoming the operational challenges that have arisen because of the pandemic.
These have included transitioning to remote working, adapting to reduced staff numbers, and ensuring that the needs of both new and existing customers have been met during the crisis.
However, another challenge which has been pushed firmly into the spotlight since the start of the crisis is vulnerability.
Whilst spotting and protecting vulnerable clients was challenging beforehand, moving to a digital-only environment has made it an even tougher task for advisers. For the later life lending sector working to identify and support vulnerable customers is more important than ever, as we navigate through this crisis.
Coronavirus has broadened the meaning of vulnerability
The FCA’s latest Financial Lives Survey from 2017 suggested that 50% of UK adults displayed characteristics of potential vulnerability. This means that in 2017, roughly 25.6 million Brits were thought to be vulnerable.
Three years on and amid a global pandemic, the figure is likely to be much higher. In fact, recent data from money management platform, Yolt, revealed that among those aged 55 and over, over a fifth (23%) have been made to feel financially insecure since the start of the coronavirus crisis.
As older households continue to be impacted by the economic fallout of the pandemic, those who might not have been vulnerable before could very well be now.
As such, the later life lending market must continue to shine a light on the issue of vulnerability to ensure better outcomes for customers.
Lenders are on the side of advisers
With new more2life research revealing that around a fifth (21%) of advisers are now treating all clients as vulnerable, it’s clear intermediaries have taken a proactive approach to this issue. So, what are lenders doing to help advisers tackle the issue of vulnerability in the equity release market?
In recent weeks, many lenders have launched free learning tools and resources to help advisers detect vulnerability in a digital-only environment. Lender-hosted webinars have proved a good starting point for those looking to build their confidence in this area.
Helping advisers adapt to how they gather information – especially soft facts – about their clients’ circumstances and lending needs in a digital world is something lenders can also provide a helping hand with.
This is particularly vital as providing telephone or video-based advice may only have become part of an adviser’s offering since the start of lockdown.
As such, building experience and confidence in this area will help advisers better identify vulnerable clients during the crisis, as well as help customers better understand their own vulnerability. Pre-prepared scripts of questions are one way to achieve this.
Maintaining quality of advice remains crucial even in these extraordinary circumstances. For advisers looking for support or to get a second opinion, there are third-party resources available to help.
For example, more2life has worked collaboratively over a number of years with Tim Farmer, a mental capacity and vulnerability expert whose firm, TSF Consultants, specialises in vulnerability and can provide remote capacity assessments for advisers. Seeking guidance from external firms like TSF can offer equity release advisers some additional steer on how to best approach potentially vulnerable clients, ensuring their recommendations lead to the right outcome.
Looking forward
Continued support from equity release lenders will be crucial to ensure that the needs of vulnerable customers are met, as the crisis progresses.
One thing the pandemic has shown us is just how quickly clients’ circumstances can change, highlighting the importance of regular, vulnerability assessments, particularly when dealing with older borrowers.
Advisers must feel confident in their ability to understand the wider context of their clients’ circumstances to ensure the recommendations they give support customers’ best interests. And, lenders will continue to play an important role in supporting many to do so, both during the current crisis and long after it has passed.