How mortgage advisers should support their vulnerable customers

20 October, 2022John Somerville

Mortgage advisers – and others who work in financial services – may understand what’s happening in the economy and how it relates to mortgages, equity release, pensions and investments. But many customers are anxious and vulnerability is spreading. John Somerville, our Head of Financial Services, explains how mortgage advisers can best support their customers.

why do we need protection webinar Today we find ourselves in another one of those situations with rising costs. Energy costs are going through the roof, while interest rates have increased to their highest levels in 15 years – with further rises expected.

Many people – including your mortgage customers – see a lot of doom and gloom in the media, when they go to fill up their cars or do their weekly supermarket shop. We’re even hearing stories of elderly customers afraid to put their heating on.

Financial vulnerability is spreading amongst those that we’d normally expect to be vulnerable at times like these. But it’s also affecting those who we’d usually expect to be more resilient.

As a mortgage adviser, there’s arguably never been a time when your people skills have been as valuable.

First-time buyers

Many first-time buyers have never experienced fluctuations in interest rates and fuel costs.

And people who bought their first property in the last couple of years expected things to stay as they have always been in their experience.

They based their budgeting on a set of parameters that they expected to remain stable. Most will have taken out a two-year fixed rate mortgage, expecting to get a similar deal next time around.

But perhaps only two years after moving in, things are very different. Their wages aren’t keeping pace with inflation and they can’t fix their energy and mortgage costs as easily as they did originally.

This is the time when a well educated and knowledgeable mortgage adviser can be a reassuring influence. You can help clients in this situation to budget. That sort of support is worth it’s weight in gold.

By recognising their vulnerabilities and helping them see their situation more clearly, you’ll enable  them to overcome their financial fears.

Soft skills like this are increasingly important for today’s trusted adviser.

Equity release

Similarly, if you’re advising on equity release, you may find some customers want to borrow more when they see their savings and income dwindling. They may be worried about their families and want to release the value of their property to help out, as we saw during the pandemic.

It would be easy to go ahead and make a transaction like this.

But increasing lifetime debt to fund a short-term need may be the wrong decision. As the Equity Release Council has often said, if there are other solutions, it’s more responsible to advise the client not to release wealth in their home.

You can only advise on equity release if you’re fully informed and trained as a specialist. If that’s the case, you’ll know the benefits and allowances that your client is entitled to. By helping them understand their entitlements and helping them budget, you could save your customers’ estates thousands of pounds.

Providing good customer service

Vulnerability can be temporary, but for the person experiencing it, the world seems like a dark place and their financial problems may seem endless and unfathomable.

We know as well trained and educated professionals that there are many solutions that will help our customers.

As the Financial Conduct Authority (FCA) has made clear, ensuring that these needs are fully understood and met is a fundamental part of an adviser’s role. It will also help you build your relationships with clients, so that you can advise them now and well into the future.

Related content

We’ll be talking more about protecting vulnerable customers at The Mortgage Conference in November.

More about our Certificate in Regulated Equity Release (CeRER)

More about CeMAP Professional