Firms referring customers for later life lending advice must place greater focus on best practice standards to ensure good customer outcomes, Key Partnerships has warned.
Key Partnerships, the referral and partnerships business of Key Group, said the continuing effects of Consumer Duty obligations and the Financial Conduct Authority’s (FCA’s) Later Life Mortgage Market Study are highlighting the need for mainstream mortgage brokers, IFAs and wealth managers to offer holistic propositions.
This includes access to later life lending solutions through referral partnerships or by advising themselves.
However, Key Partnerships said too many firms do not understand what best practice standards to look for when selecting a referral partner, with a need to prioritise customer outcomes, transparency and robust oversight.
It said any referral relationship should focus on customer understanding and ensuring suitable advice is provided.
This means all relevant solutions are considered and discussed, including later life lending options such as lifetime mortgages.
The referral partner should complement the referring firm’s core proposition, enabling advice to be delivered holistically and in line with good customer outcomes, it added.
Best practice in referral partnerships
Key Partnerships said referral partners need to demonstrate adviser training, ongoing competency standards, as well as quality assurance and robust oversight processes.
It said advice should begin with a clear exploration of the customer’s needs and objectives before moving to solutions, including full explanation of risks, benefits and long-term implications, alongside consideration of affordability and alternatives.
Advice must be in line with Consumer Duty.
Introducers should also ensure their referral partner checks customer understanding and encourages involvement from family members where appropriate.
Above all, advice must be tailored, with recommendations clearly linked back to individual circumstances and delivering fair, evidence-based outcomes in line with Consumer Duty expectations.
Damon O’Connell, director at Key Partnerships, commented: “Building a referral partnership with a specialist later life adviser is often the sensible path for firms looking towards delivering holistic advice but with gaps in their core offering. However, firms need to be confident in their partner.
“Deep experience and expertise in the fast-growing market is essential. Later life lending can be complex and nuanced, which means partners need to be able to provide genuinely independent, whole-of-market advice.
“With many new entrants emerging, working with an established referral partner with long-standing expertise in later life lending can help reduce risk and ensure consistent standards.
“The referral relationship must work for both the adviser firm and their client. Firms should be able to remain as involved as they wish, while maintaining and strengthening the client relationship.
“A referral relationship with a trusted partner such as Key Partnerships can support the development of new income streams and help deliver good customer outcomes aligned to Consumer Duty obligations.”
