Written by Kay Westgarth, Sales Director at Standard Life Home Finance
In the ever-evolving landscape of financial regulation, the recent introduction of the FCA Consumer Duty has significantly propelled the responsibilities of lenders and advisers alike further towards supporting today’s customers. It’s no longer just about demonstrating you are treating customers fairly, it is about ensuring and evidencing good customer outcomes.
But, as we approach nine months since the implementation of the Duty, what does this mean in practice? How has the new guidance affected the way financial advice and lending products are offered, particularly to individuals over the age of 50?
Delivering the best customer outcomes
Today’s financial climate demands a deeper understanding of customer motivations and concerns. This understanding is crucial in tailoring products and services to support customers effectively. With the new regulatory changes, there’s a heightened emphasis on affordability-led suitability and managing the total cost of borrowing. Advisers must demonstrate that they’ve thoroughly considered all alternative options before making recommendations, ensuring that customers have a sound understanding of the products presented and what they are recommending.
In the later life market, where propositions have been evolving, advisers need to stay informed about the range of products available and how they fit within the affordability spectrum. Educating customers about the total cost of borrowing and exploring various options beyond headline-grabbing rates is essential for achieving better customer outcomes.
Product innovation
As the financial landscape evolves, so do the products and services available to consumers. At Standard Life Home Finance, we recognise the need for flexibility and tailored options in the later life lending market. In February of this year, we launched our brand new Horizon Interest Reward product, which exemplifies this commitment to innovation and customer support.
Horizon Interest Reward is designed for traditional equity release customers who are willing and able to make regular agreed payments instead of optional voluntary repayments. By committing to set monthly interest payments for a specified term, customers can benefit from a discounted interest rate, resulting in significant savings over the duration of their lifetime mortgage. The level of discount is based on the amount of interest paid (25%, 50%, 75% or 100%) and the term the customer commits to (5, 10 or 15 years), offering flexibility while keeping affordability at the forefront of conversations.
Horizon Interest Reward also allows for optional additional repayments outside of the agreed terms, providing customers with greater control over their financial commitments. With features such as fixed early repayment charges of just 8 years, downsizing protection from day one, and a permanent ERC exemption following bereavement or entry to long term care, Horizon Interest Reward aims to provide customers with a comprehensive and flexible borrowing solution.
At Standard Life Home Finance, we recognise that the market is constantly evolving, and so too are borrower needs. We are therefore regularly looking at ways to innovate and polish our Horizon Interest Reward offering. With the latest set of updates, we have introduced a 25% interest-served option and customers are rewarded with an even broader range of rate discounts from 0.03% to 0.75%.
Consumer Duty has reshaped the landscape of financial responsibility over the past nine months, placing a greater emphasis on customer outcomes and affordability. For lenders and advisers, this means understanding customer needs, exploring innovative solutions, and providing tailored support to help customers achieve their financial goals.
IFA Talk – hear more from Kay Westgarth on our popular podcast
As later-life lending is becoming more and more relevant in client conversations, we enjoyed talking to Kay in a recent episode of our popular IFA Talk weekly podcast #77 entitled ‘Later-life finance options for clients’.
