Key and MorganAsh collaborate to lead the Later Life Lending sector on vulnerability

02 August 2022

Key has agreed to work collaboratively with MorganAsh on a pilot scheme to use its new adviser tool to support later life lending advisers in identifying, assessing and managing client vulnerability.

MorganAsh launched its MorganAsh Resilience System (MARS) in April, but had been working with Key since last year to test and refine the interaction with consumers and customising results specifically for older borrowers in need of later life lending.

MARS provides a simple-to-understand objective ‘Resilience Rating’ similar to a credit score. It has been designed to provide a more consistent approach to managing client vulnerability and makes evaluating consumer vulnerability far easier and more consistent. The system and its rating methodology enables lenders and particularly advice firms to provide more robust solutions based on a personalised understanding of individual client circumstances.

Although a consistent approach exists for the assessment of credit risk, via credit scoring, until the launch of MARS, there has been no equivalent methodology within the lending market to assess vulnerability risk.

The MARS system is incredibly timely as there is about to be much greater scrutiny on how financial services firms evidence a consistent approach to vulnerability management. This is due to the FCA’s recently updated guidance on vulnerable customers, the insights provided by its Financial Lives survey, and its recent announcement of a new Consumer Duty regulation to ‘drive a fundamental shift in the industry’s mindset’.

Both Key and MorganAsh believe that having a more consistent method of assessing customer characteristics and vulnerability will enable a more robust understanding of need – and therefore deliver a better customer outcome. It should also ensure that conduct risk is better understood within the advice and product servicing process.

However, aware of the potential stigma for an individual if labelled as ‘vulnerable’, MARS instead focuses on strengths – a person’s resilience. The highly-secure system provides simple ratings which reflect every aspect of a person’s characteristics or resilience, including health, wealth and life events.

Will Hale, CEO of Key, the UK’s largest equity release advice firm, said: “Everyone is vulnerable at some point whether due to their health, finances or life events and how this impacts them differs from person to person. To ensure that we are delivering the best possible outcomes for all customers, we need to move beyond simply identifying vulnerability and look at the more holistic concept of resilience and how support needs to be tailored according to individual circumstances.

“We are therefore delighted to be working with the new MorganAsh service which provides a simple, objective and consistent way of better understanding an individual’s vulnerability via a ‘resilience rating’.

“At Key, we are committed to helping customers achieve the best possible outcomes and as part of this, we are exploring this pilot with MorganAsh.. The industry needs more initiatives like this and we would like to add our voices to those of leading figures from organisations such as the Association of Mortgage Intermediaries and the Vulnerability Taskforce who welcome this as a step forward for the industry.”

Andrew Gething, managing director at MorganAsh, said: “It is odd that there is a consistent method of assessing credit risk within the lending market, but, until now, there has been nothing to assess vulnerability risk. This represents a clear gap in a firm’s understanding and is almost guaranteed to lead to inconsistent outcomes.

"Initial work on vulnerability has focused on training, but firms have quickly realised that to reach consistency in assessments the training overhead required is extensive and hence costly. The MARS tool greatly reduces the training and assessment burden from advisers so delivering vulnerability management efficiently.

“When looking at vulnerability and resilience, older borrowers can be amongst the most vulnerable. Key is therefore leading the market in being the first equity release broker to adopt the MARS system. The fact that they are also working with us to refine our system for later life lending shows how seriously they take providing best advice and finding the right solution. Ultimately, the more we all know about individual customers, the more certain we are that we can provide them with the right outcome.