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PFS: Equity release advisers should have investment qualification

The Personal Finance Society says advisers recommending equity-release plans should have a QCF level four investment qualification.

To advise on equity release, advisers have to take a regulatory and ethics exam, an equity-release exam and a mortgage exam. The current equity-release qualification is QCF level three.

Advisers conducting only lifetime mortgage business do not need further FSA permissions if they are already able to advise on mortgages. Advisers offering both lifetime mortgages and home-reversion plans need additional permissions covering home reversions.

Writing in this week’s Money Marketing, PFS chief executive Fay Goddard says: “I believe equity release has a rightful place in the market and fully support the desire for a professional and trusted adviser community. However, to achieve this, I question if both the level of the current qualification and the scope of FSA permissions is correct.

“That an adviser is able to recommend someone effectively disinvests what is often their largest asset without being FSA-qualified in investment advice, so unable to discuss their pensions or any investments, makes no sense to me.”

Bower Retirement Services equity release planner Simon Chalk says: “I do not entirely agree with Fay that equity-release advisers should also be able to advise on investments but I do think they should be qualified to QCF level four.”


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. martyn sinclair 5th April 2012 at 11:04 am

    I also believe that all people regulating the investment market ought to be qualified to at least level 6 – otherwise how on earth do they know what they are talking about.

  2. lorreine kennedy 5th April 2012 at 1:24 pm

    I am not too sure about the need for investment qualifications. I can’t follow her argument. I don’t meet clients who have large amounts of investment when they have debts or a need for additional income. At the moment the clients I am meeting need support on budgeting, debt dounselling and claiming benefits (if eligible). Am happy to have an advanced exam however as it will stop any dabblers from entering the market place.

  3. Jack of all trades 5th April 2012 at 3:23 pm

    Well well hear we go again. Can I remind Fay that in a time not so long ago advises took money out of property to reinvest- Scandal and complaints followed!! We now live in a world were the adviser follows the basic advice set by the FSA. This advise is to recommend that clients use their own money first (cheapest money) and to release money only when required. You don’t need a diploma to state the obvious.
    Equity release now has lower levels of complaints than almost any other area of financial business. Why fix something that is NOT broken when so much work needs to be done on fixing the areas that are!
    I am a humble mortgage adviser (specialising in Equity Release) but I regularly need to explain to supposedly highly qualified IFA’s the basics. These diploma level IFA’s would not recommend disinvesting and would even reinvest. If we are to move to more professionalism in the equity release market we need to stop the dabbler as he may be highly qualified but has not got a clue what he is doing!!!

    We need a more stringent specialist Equity Release adviser qualification. Making Equity release yet another string on an IFA’s bow will only result in extremely poor advice and a return to scandal.

  4. I can’t see how they can make a level 4 exam for equity release. The current equity release exams were the easiest financial exams I have ever sat. There can’t be much more that they could cover that advisers in this area would need to know.

  5. Cannot follow Fay’s reasoning and I always smile when I read about exams in “ethics”. Is this the same as “treating customers fairly” but accompanied by the full panoply and expense of exam boards/training specialists/compliance etc, etc?

    I agree with previous comments. Let’s keep the dabblers out of Equity Release, especially those highly trained in investments (but not so highly trained in “ethics)” who might be tempted to combine the two (it’s happened before).

    Incidentally after 8 years experience in equity release I have recently moved to another specialist operation who are appointed representatives of a larger operation. I have to submit my recommendations to a compliance monitor who apparently doesn’t know the difference between a lifetime mortgage and a reversion plan!

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