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Advisers’ commitment to regular client contact

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Advisers’ commitment to regular client contact

As we moved into a new year, it was perhaps not surprising to see the regulator reiterating a number of Consumer Duty-related messages for advisory firms, particularly in light of its later life mortgage market review results, published in September.

At November’s Equity Release Council summit for advisers, the FCA’s Head of Department for Cross-Market Intervention, Mark Burns, took the opportunity to highlight three areas later life advisers should be focusing on, in light of both those aspects mentioned above, namely a focus on personalisation for individual customers, challenging customer assumptions and having clear evidence for the product recommendation.

This is completely understandable however I would also add to that another aspect of advice must-haves, also mentioned by Burns, and it comes in the form of ‘monitoring and reviewing outcomes’ – essentially the provision of ‘ongoing advice’ after the initial transaction has completed.

Because, in my view, this is now just as important under the Consumer Duty rules, not least because a change in client circumstances – even in a short space of time – can clearly have an impact on whether the initial advice provided continues to be the right advice throughout the term of the product.

Now, I fully expect some advisers to point out they can’t possibly know the future for their client but clearly what they can do is continue to check in with them regularly in order to ascertain whether there has been any change in circumstances which might, for example, change their ability to service interest, or might have changed what they want to use the money for, or they themselves might be in a different financial situation, or physical or mental state.

Advisers are only going to know this if they commit to that regular communication and contact, and it’s clear from what Burns was talking about, that under Consumer Duty, the regulator is thinking of a positive outcome at the point of advice, but also in terms of its relevance for the client moving forward.

To me, this is particularly relevant in terms of the client’s ability to service interest on their lifetime mortgage or indeed any mortgage in later life, because paying this off – whether in full or partially – can make a significant difference to the end result, especially when it comes to interest roll-up and the potential sale of the property either when the customer dies or they move into long-term care.

In a way, checking in with the client – and keeping a full audit of that contact – might be crucial not just in showing to the regulatory your compliance, but also in helping fight any complaints that might be forthcoming in the future, potentially from family members who might argue such an option was never offered.

It’s important to point out that this isn’t a catch-all solution for advisers to present to clients. We have to be fully aware, for example, of the rate the product is compared to perhaps the savings rates that can be secured now. If advisers have clients whose loan starts with a four, and they can currently secure savings rates that begin with a five, then it may be better for them to save any excess money rather than paying off the loan’s interest.

However, again without any client contact, you’re not going to know the circumstances they are in, what their current tax position might be, what savings allowances they have left that year, or personal tax allowances they’ve not used, or indeed potentially any benefits which they are not claiming.

Again, it’s all about committing to regular client contact, and also a commitment to do more than simply say hello, but instead re-engage and review, ask the questions that will give you enough to go on to ascertain whether what was right then, continues to be right now. As we know, this market also changes a lot and we have product options and solutions now that might not have been available back then.

You can see why this could be construed as an ongoing activity, and why the regulator may want to see evidence of this. It should not take much to get in contact and carry out this work, but it could make all the difference to both the customer, and you as the adviser.

Stuart Wilson is Chairman of Air Club

First published in The Intermediary on 16th January 2024

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