How Air is breathing new life into the affordability conversation

Simon Meadows [08:36:41]

Hello, everyone, and welcome to MITV, brought to you by mortgage introducer. Now the cost of living crisis continues its hold on the UK. And with it, the issue of affordability is a key one for the mortgage industry. Well to discuss this, I'm delighted to be joined by Paul Glynn, who is CEO of Air Group. Thanks for joining me, Paul.

Paul Glynn [08:37:05]

Thanks, Simon. Nice to be here.

Simon Meadows [08:37:06]

Well, it's great, you can share your time and I'm looking forward to hearing your insights on this important matter. So let's start by finding us a bit about the business that you lead.

Paul Glynn [08:37:17]

Within our group, we provide technology and sourcing solutions to advisors who operate in the later-life mortgage market. And we provide a variety of different tools and advice aides to help them drive the best outcomes for their customers in the most efficient way. So we've got anything from ability to source the best rates in the market at any point in time through live API's with lenders all the way through for those people who come in into the market for the first time, we've got a complete Learning Academy that's accredited by the LIBF. So it's a really good next step when someone's done their qualification to learn a little bit more about the next steps. And the different modules are built around the equity release councils competency framework. So again, it's all there and set up for a for an either a brand new advisor to come into the market and start trading. Or there's a raft of advice, tools and support mechanisms for those people who've been in the market a long time. And we, you know, we have got a number of members who've been pooping with their. And we've seen their businesses grow from being individual advisors all the way through now to specialist firms. So there's a range of support there.

Simon Meadows [08:38:32]

Excellent and how do you view the market currently and its challenges, I suppose, particularly with affordability in mind?

Paul Glynn [08:38:41]

So I think, from a market context, we've seen quite a lot of product change over the last sort of couple of two or three quarters, particularly since October, where there was a lot of volatility in the market. I think advisors have got to grips with the rate changes that flowed from that. I think we're all now trying to grapple with the wider problem of a capping into terms of LTV, so to provide customers who are potentially needing to raise funds to pay off mortgages, etc. In the current environment, that capping of LTV could be a little bit of a problem. But in terms of broad approach to affordability, we're working at the moment on supporting advisors ensure that they put forward ability right now at the heart of the of

the process, to do a couple of things, firstly, to make sure that when they're driving different conversations with customers, they're looking at affordability as a way of making sure that they're considering all of the products that are out there and available to customers in the later life space. And sometimes making interest payments rather than having roll up of interest could be the most appropriate thing for the customer. So affordability is really crucial to be at the heart of that, that the start of that decision-making process. And then secondly, where customers can make payments is difficult and environment is we may be in in terms of cost of living where they can make payments, it's really important that customers are guided by advisers on the impact of that in keeping their overall cost of borrowing down. That then could keep more product options open but more importantly, preserves the the most amount of equity possible in their property if they're looking to, to pass that on at some point in the future and keep borrowing costs down. So what is a historically an equity release market that's driven by roll up of interest? We are now seeing a lot of our members start to really broaden out the product discussions with affordability and afforded for durability-based questions right at the heart of that process to drive the best outcome they can for their customers.

Simon Meadows [08:41:08]

Really interesting. In terms of the issue of affordability, are there any particular products or services that you'd want to reference in the way that you are meeting the challenge?

Paul Glynn [08:41:21]

Well, Simon, Air has just launched a new tool for its advisors called the later life lending navigator. That tool is a standalone tool designed to be used by more Mortgage advisors or qualified equity release advisors with really an objective to ask the customer some simple affordability questions quite early on in the process that will then signpost, the product landscape that's open to them based on the heart answers to those questions. And it can then be used to signpost to the customer from the advisor. areas they might may want to explore later. So it'll do a first pass on basic heart affordability of simple questions and qualification criteria. And then it does a second pass based on what the customer may want to pay, because they could be two different things. And we'll ask more details around the rationale for that and capture that for the advisor. And then it will ask some preference questions really simple scoring five or six scoring questions that are designed then again to show whether the customer could be more prioritised to standard residential mortgage products based on what they can pay and what their preferences are, or more to the later life lending market. But it is designed then to be a audit trail. So the advisor who is referring from equity release into mortgage base, or residential mortgage into equity release. So we are working hard with a number of different large organisations compliance teams to help embed that into the process really designed that making sure that those four affordability questions drive and inclusive start to the process looking at all products. And then eventually working through the questions give the customer in the latter stages of that tool, a comparison on the light for light basis of all those different products options that are available in terms of the cost of borrowing over a 15 year period. They're really useful to for advisors trying to do the best they can for their customers.

Simon Meadows [08:43:35]

And what is the response been so far from advisors from the industry? Generally?

Paul Glynn [08:43:41]

It's been really positive. I think it's it timing wise, it came off the back of some regulator announcements that said that, you know, that they wanted to see more of that and more personalised, more inclusive and more personalised approach to dealings with customers. So it does exactly that for advisors. So timing wise, it's been helpful, but we've seen a really positive and encouraging set of feedback from some of the larger networks in this space. And some of the broad spectrum of lender partners that are has, you know, there were there were eight organisations helped us design and frame those questions. So it was a really inclusive approach from err on how we built it. So we have had some really good, really good feedback as a result.

Simon Meadows [08:44:32]

Obviously, developing a tool of this kind involves automatic anyway, a fair bit of investment in innovation, how important how key is innovation to air.

Paul Glynn [08:44:44]

Massively important, I think our technology team are at the heart of everything we do, whether that's our learning platform to make volumes of hours of CPD material available and easily accessible to advisors through the modules. And we're going to continue to develop that we've invested heavily in re-platforming, to be able to, to be able to accommodate future changes, because we know that it's quite likely that the product landscape in the later life lending space is going to change quite rapidly over the next over the next couple of years. And we want to make sure that air can adapt to that really quickly. And we've developed a number of different tools and process support. So our factfinding suitability capability that runs alongside our sourcing platform. We've invested heavily in to make sure that it meets the needs of all of the compliance officers that are out there in the market. So we've got a compliance corporate partner endorsed version, which takes into account hundreds of user stories from compliance teams to make it the best it can be to be a sort of safe, safer track for advisors to operate on and drive good customer outcomes. The technology is massively important for us.

Simon Meadows [08:46:10]

Do you think the industry is doing enough generally to address this area? And also the advisor community? What's your view on the way that the advisor community is addressing affordability? Does it need to step up at all?

Paul Glynn [08:46:24]

I'm really encouraged by the way that the advisor community and in particular as members have embraced the concept of that that Navigator tool for example, are therefore recognising the need to put affordability at the start of the process. So we only had that tool out in the market for a couple of weeks, and we've got about 250 firms now registered for demos or where we've, you know, we're in the process of deploying it. So, again, it's each firms taking a personalised approach to how they want to position it with their advisors and for their advisors to position it with customers. So it's been really pleasing to see, you know, the depth and the seriousness at which, you know, firms are the lengths that firms are going to, to make sure that that's embedded properly. And our teams are there to support so very happy, with what we've seen so far.

Simon Meadows [08:47:14]

And how important is the relationship that you have with brokers? How key is that to what they're does day to day?

Paul Glynn [08:47:23]

Brokers are at the heart of everything we do, we are a membership driven organisation. So wanting to still bring newer advisors through into the market support those advisors who are maybe moving firm, those firms that want to develop into a more specialised practice takes very seriously the, you know, its role in how it can support these firms develop their, you know, their later life lending business, whether that's for REO products, or for wider residential products, or, you know, the sort of full faculty release options that are out there. And we're really keen to make sure that air continues to develop, to account for what may be a more hybrid style of approach in product design as we go forward. And we think we can play a really crucial role both in education and a transaction process itself.

Simon Meadows [08:48:21]

In terms of how important affordability will remain as an issue. Um, to what extent do you think that actually, well, obviously unsettled economy, and no one knows how long that's gonna go on for? But to what extent do you think it will continue to be one of the key issues in the industry going forward? Or should it arguably always be an issue that people are focused on?

Paul Glynn [08:48:41]

I think, I think affordability in the broad mortgage context is, you know, is always going to be a hot topic, I think it's, it's of particular relevance, though, in the later life lending space given to give in brilliant customer outcomes, firms have to put that right at the heart of what they're doing. You know, considering how much a customer can pay and wants to pay is the best way to ensure they've got the broadest number of product options available to them at the start of the advice process. And then the advisors can continue the great job that they do from there in making sure that the end product matches the needs and the circumstances of customers safe in the later life lending space. It's absolutely crucial that customers, your advisors use affordability and the tools available to make sure that they give the customers those breadth of options, but more importantly, that way they can make payments, they keep those costs down over time.

Simon Meadows [08:49:39]

And how do you see the future of Air as a business? What are your plans going forward?

Paul Glynn [08:49:46]

I'm really excited about the future Simon, I think the potential for product design in our space, the potential for clients to be cross fertilised across both the mortgage market and the later life lending the qualified equity release spaces is immense. There's a lot of customers out there that really do need support and help from advisors. So the more we can do to encourage mortgage advisors to talk about later life lending products and the qualified equity release advisors to need to pass across those customers that are in need of products that you know are based on being able to afford and make payments where they don't want to transact in themselves that cross referral capability amid some what could be some quite fantastic product design from the market over the next over the next few months and years is is quite an exciting prospect both for me as a CEO there were recruitment is important to us. So it could bring a new engagement with a lot more mortgage brokers new into the market, and it

will certainly help us support those firms that have been in our traditional equity release space, which is where really you know, built its membership from it'll certainly help us support those firms in a different way going forward as well.

Simon Meadows [08:51:11]

What is the culture of Air would you say? That is part of that sort of root cause for the business?

Paul Glynn [08:51:19]

So culturally, we put the advisor at the heart of everything we do, and I think probably get as matured over the last decade or so. That shifted not just from putting the advisor at the heart of everything we do. To put in the firm principle and now as we see some of the tools we're designing in the, in the space like right route or the navigator to put the, you know, the needs of the compliance officer in that in that camp as well as has been at the heart of everything we do, really to provide the safer, safer mechanisms to transact business in our market and drive great outcomes for customers.

Simon Meadows [08:52:00]

Well, sounds very encouraging. Paul, it's fascinating talking to you. I really enjoyed our time. Thanks for joining us.

Paul Glynn [08:52:07]

Thanks, Simon.

Simon Meadows [08:52:08]

Well, that's it for this edition of MITV brought to you by mortgage introducer. Do join us again for more industry insights. In the meantime, thanks for watching, and goodbye.