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Advisers back calls for standalone equity release qualification


More than 60 per cent of Personal Finance Society and Society of Mortgage Professionals members support the idea of a standalone equity release qualification to enable pensions and investment advisers to sell the products without having to be fully-qualified mortgage advisers.

Currently advisers must be mortgage-qualified up to level three in order to advise on equity release.

The FCA is consulting on the merits of a standalone equity release qualification, which could be taken by pensions and investment advisers as a top-up to their existing credentials without them having to qualify in all other areas of conventional mortgage advice.

Sixty one per cent of the 1,000 members questioned said they thought it should be a separate top-up to existing pension and investment qualifications.

Meanwhile, 77 per cent think investment advisers who don’t currently hold mortgage qualifications, particularly those active in giving later life advice, would seek to acquire a standalone equity release qualification.

“Clear appetite” for new qualification

Society of Mortgage Professionals operations manager Vishal Pandya says: “The result show a clear appetite amongst advisers for a dedicated new qualification, to adequately reflect the recent rapid growth in the sector.

“Our members would appear to agree with the FCA that the current structure of the existing equity release qualifications may be a barrier to a wider number of consumers wishing to access the product.

“Lifetime mortgages are the main form of financial product consumers use to release equity, so when the appropriate examination standards for equity release were first developed it was natural to use an approach that built on an existing knowledge of mortgages. This reflected and reinforced mortgage brokers being the primary distributers of equity release products.”

“Our ongoing work looking at competition in the UK mortgage market has confirmed that many stakeholders believe that some independent financial advisers may not be offering equity release because they need to be appropriately qualified for a product (mortgages), that otherwise they have no interest in selling.”

Worries over IFA knowledge

However, Pandya cautioned that although a standalone qualification could increase the number of advisers than can recommend the product, in the long run this could paradoxically be a concern if the advisers doing so were not suitably knowledgeable about conventional mortgages – given that they may not be level three mortgage qualified.

He also pointed out that any re-fashioning of content or decoupling of equity release from the mortgages unit would need to be designed with sufficient mortgage content in the equity release component, in order to guarantee proper levels of competence and the fair treatment of customers.

He adds: “This would be crucial due to the strong links between mortgages and equity release, particularly in respect of some of the newer mortgage products available to older borrowers.

“In the third quarter of last year alone, the value of equity release lending increased by 26 per cent year-on- year to £571.6m. It is no longer a niche market and the adviser community needs to reflect this by giving serious consideration to a new qualification.

“That being said, it seems unlikely that there would be an immediate surge in numbers in what is still deemed to be a specialist area with a relatively limited, albeit growing, market share.”



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