John MacDonald recently presented at the Later Life Lending Summit, where he explored strategies to navigate the know your client competency, emphasising how financial advisers can tackle property valuation challenges to ensure better outcomes under Consumer Duty regulations.
At the Later Life Lending Summit, we delved into the Council competency of knowing your client, focusing on ways to navigate the property puzzle and achieve better outcomes for customers.
Since the introduction of Consumer Duty, financial advisers have a duty to take reasonable care to avoid foreseeable harm. This has increased the awareness of potential impacts caused by submitting applications that are subsequently declined or result in the need to re-advise, leading to poor outcomes.
From our experience, around 1 in 4 customers need their advice revisited following a property valuation. Here are three key areas to consider to avoid this:
Get to know your customer
It’s crucial for customers to understand the application process and potential challenges from their property valuation. Educating them and setting realistic expectations can help prevent harm and reduce the need for revisiting advice. Explain the surveyor’s role, the process, and its importance, including the steps involved, who will contact them, the surveyor’s approach, possible outcomes, and consequences.
Research
When we say research, we’re not referring to product sourcing systems, but your work before an application is made to establish the best course of action. Before submitting an application, establish the best course of action by thoroughly assessing the property. During a customer visit, you could observe the property’s location, condition, presentation, and construction type. Look for factors that might concern lenders, such as spray foam, PILONs in the boundary, or proximity to commercial properties. Conduct research on comparable sales before meeting the customer to identify the most suitable lender for their needs.
Personalisation
Every property and customer situation are unique. Ask specific questions about non-visible factors that could impact your advice, such as property ownership details, ground rent, or service charges. When presenting a property to lenders, provide as much information as possible to increase the chances of acceptance and smooth progression to completion.
By focusing on these areas, financial advisers can better manage the property puzzle and ensure positive outcomes for their clients.
