Why every financial adviser should be up to date and qualified to advise on equity release
With rising costs and reducing retirement incomes, the equity release market looks set to grow over the years to come. This, at first glance, seems like a positive move forward for both customers and equity release companies, as more advisers add equity release to their portfolios. Some companies, however, remain reluctant to advise on equity release due to concerns about reputational negativity and this has appeared to translate into a reluctance to recommend equity release products, even when it may be in the client’s best interest to do so.
FSA requirement for financial advisers’ certification strengthens compliance and quality control
However, any negative perceptions are set to change as the FSA, in a move welcomed by reputable equity release providers, has now confirmed that, by April 2009, all those wanting to advise on equity release products must hold the appropriate qualifications. This supports the stance taken by SHIP (Safe Home Income Plans) who declared in 2007 that their member providers, who account for around 90% of the equity release market, must only accept applications on behalf of the public from fully qualified equity release advisers, by April 2008 – a full year before the FSA ruling comes in.
Equity release is one of a number of options open to customers to help them raise some much-needed funds for retirement planning. As with any financial decision, there are potential risks involved with each option and the FSA has classified the equity release sector (lifetime mortgages and home reversion plans) as 'high risk'. The potential vulnerability of customers and the complexity of the products mean it is essential that customers receive advice from advisers who demonstrably understand both the pros and cons of equity release, as well as the options available and which would best suit their customer’s situation.
Equity release industry welcomes the move
The FSA move is great for the industry – and good for those consumers who need help in generating additional retirement income without losing their family home.