A guide to the regulation of lifetime mortgages is being published by compliance and marketing company Simply Lifetime.
The guide, aimed at IFAs and distribution networks, anticipates the regulation of lifetime mortgages from October 31 and explains how the sales process will differ under the new FSA rules. It focuses on how suitable advice must be given.
The brochure pinpoints several questions that Simply Lifetime says are essential to ensure suitable advice is given:
Whether the lifetime mortgage will have an adverse effect on the client's means-tested benefits or tax position.
Whether more suitable alternative methods of raising funds, including home-reversion schemes or grants such as those from local authorities, should be considered instead.
Whether the client can afford any interest payments that are to be paid to the lender.
Whether the particular lifetime mortgage is appropriate to the needs, objectives and circumstances of the borrower.
Advisers should also consider the costs associated with increasing the period over which a debt is to be repaid. Where a customer is known to have payment difficulties, the adviser must address whether it is more appropriate to make a creditor arrangement rather than take out a new mortgage.
The guide is available online at the website www.simplylkifetime.com.
Partner Alastair Waldron says: “We are 100 per cent dedicated to the lifetime mortgage market and we want to see it grow and develop a better service for the customer. This guide is an important contribution to that objective. We think this is a unique category of the market that deserves specialist input.”
Council of Mortgage Lenders senior policy adviser Jackie Bennett says: “We welcome the act that lifetime mortgages will be regulated under the new FSA rules. We also welcome this guide which will help intermediaries to understand the requirements.”