The introduction of Consumer Duty will drive more specialist equity release referral relationships when the market steps up to meet the new standards, a new report from Key Partnerships has suggested.

Research for the report revealed that 57% of introducers believe they need to make changes to processes to be up to standard for the new rules, which the Financial Conduct Authority (FCA) has confirmed will start to take effect from July this year.

Key Partnerships, the equity release referral service arm at Key Group, has stated that the new provision requiring firms to deliver good outcomes for clients will mean simple and informal “hand offs” will no longer be appropriate.

Around 7% of firms questioned believe they need to make significant changes ahead of the implementation of the rules, while 12% believe they need to make moderate changes. Around 38% also acknowledge they will have to make a few changes. Just 22% of respondents said they do not need to make any changes as they are already fully compliant, while 16% don’t know what changes will need to be made.

Key Partnerships’ report, which includes feedback from more than 850 introducers, highlighted how the introducer market differs from the wider market and underlines the opportunities for potential introducers expanding their services.

Business development director at Key Partnerships, Jason Ruse, said: “While some organisations already have successful referral relationships in place, others have taken a more informal approach or been unable to support customers at all.

“Under Consumer Duty, with the requirement to focus on good customer outcomes, a simple hand off will no longer be appropriate so we anticipate that we will see increased interest from a range of organisations.”

Referral customers typically release more property wealth on average than the wider market, at £133,048 compared to £114,354, with some introducers such as accountants recording average amounts of £183,334, according to figures from the report.

Around a third (32%) of introducers questioned by Key Partnerships also said they would advise similar firms to themselves who are not referring clients to equity release specialists to consider doing so, while around 30% said similar firms should speak to the experts on equity release.

“Businesses which need to comply with Consumer Duty will not be alone in looking to build referral relationships as more and more older customers consider the role that housing equity can play in their later life finances,” Ruse added.

“We saw a record £6.3bn released in 2022 by people seeking to manage debt, support families and boost their retirement income as the cost of living crisis continues to bite.”

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