While the US is a litigious culture, with over 40 million lawsuits filed each year, the UK prefers a nice grumble.
We get annoyed if it’s too hot or too cold, we huff if the queue at the supermarket seems to be taking too long and glare when someone steals our parking space. So, it takes quite a bit to get the average customer to put pen to paper and complain about the service they did – or did not – receive.
Unsatisfactory experiences in the later life space
As a compliance and risk specialist, this quirk in the national psyche makes our analysis of the quarterly published Financial Ombudsman Service (FOS) data even more fascinating.
Now, the FOS only becomes involved if the customer and company are unable to reach an agreement, so what has driven these older homeowners to persist with their complaint?
Firstly, it is worth noting that of the 82 published complaints that mentioned ‘equity release’ in Q1 2024, only 34 actually pertained to these products.
The others refer to equity more broadly with regards to investments, banking scams, building insurance and residential mortgages.
And of those 34 complaints, 11 were made by executors or family members. At the Equity Release Council (ERC), we actively encourage advisers to ensure that families are included in the decision-making process, but some customers are resistant.
They might find it uncomfortable to discuss their finances with their children as they don’t want to worry anyone, or because they feel they have already provided enough support, or simply because they are not particularly involved with their lives.
There are a myriad of reasons, but advisers still need to ask the question and clearly record the outcomes of these conversations.
Less than a third of the complaints – nine – were upheld or partially upheld. While I would prefer no complaints upheld, this low figure highlights the value of the safeguards provided by the council and the quality of advice in this market.
Uncontrollable circumstances
Further analysis suggests that the main reason behind upheld complaints was delays in the process leading to higher interest rates. While we have not analysed the 410 upheld residential mortgage market complaints over the same period, I suspect that this was an issue for this sector too.
In 2022, we saw eight interest rate rises and, in 2023, the Bank of England increased rates five times, which saw people clamouring to complete as quickly as possible. While equity release rates are linked to gilts, the sense of urgency as products rates change quickly was also evident in this part of the later life lending market.
Equity release works for most borrowers
So, what can we learn from these figures? Firstly, we need to focus on ensuring that the application process goes as smoothly as possible, as while we do not anticipate such a volatile market in 2024, customers need their money in a timely manner.
Secondly, we need to consider how we better communicate these figures to the wider market, as nine upheld complaints is a sign that something is going right.
No one is perfect and there is always more to learn, but when you consider these products’ historical reputation, we need to be proud of what we’ve achieved and consider how we achieve even more.
