Plans scrapped but majority support equity release qualifications
The recent abandonment of the standalone equity release qualification has split opinions within the equity release market.
Mooted in September 2016, the Financial Conduct Authority (FCA) announced that they would consider the introduction of a standalone qualification for equity release. The support for a qualification of this kind had been demonstrated in a poll conducted by the Society of Mortgage Professionals which found that around 77% of the 1,000 member respondents had responded positively to its introduction.
However, last month the FCA decided against bringing in a standalone qualification for equity release, highlighting in a policy statement that the majority of those who had provided feedback did not think “that an alternative to the current approach would lead to a significant increase in the number of people appropriately qualified”.
The Authority also noted that a solid understanding of mortgages is an “important competency” in providing equity release advice, despite some firms indicating they’d like to offer holistic advice regarding retirement.
The decision was backed by the Chairman of the Equity Release Council, Nigel Waterson. He expressed his support towards the FCA’s conclusion and stated that, given the varying needs of consumers, it’s important that advisers have a wide range of knowledge in order to deliver appropriate advice.
Instead of preventing the progression of the equity release market, Waterson mentioned that the decision would facilitate its movement towards the developing collaborative solutions for pensions and other later life planning. He stated, “consumers can increasingly benefit from a structured approach to financial planning”.
The support for the FCA’s decision was not felt by all. The U-turn was branded as “disappointing” by Chief Corporate Officer at Bower Retirement, Andrea Rozario. She contested Waterson’s opinion in regard to adviser awareness, stating that the skills required to deliver equity release advice are vastly different to those needed purely within the mortgage market. Rozario stressed that although mortgage awareness, in general, is important, the introduction of a standalone qualification could have honed the skillset needed within the equity release market.
Sharing Rozario’s view was Head of Marketing at Retirement Advantage Equity Release, Alice Watson. Further to stating the decision made by the FCA signified a “missed opportunity”, she highlighted the growing demand for equity release within the UK and the parallel growth in demand for qualified advisers. As more and more people recognise that the wealth within their properties outweighs that in the pension, the need for advice on boosting funds through equity release will continue to grow. Watson also stated that in addition to helping those who are already aware of the benefits, more advisers are needed to introduce equity release to those who may not have even considered it as a potential solution.
A joint project between several regional law firms, Equishield provide professional legal advice for Equity Release Mortgages across England and Wales. More information can be found on their website.