Advisers warned against equity release grandfathering

While new advisers need to obtain a qualification, FSA rules state that those who were deemed competent under the MCCB rules to sell these products can take advantage of a ‘grandfathering’ arrangement.

But Fox warns, “The danger is that advisers will leave themselves exposed to claims of inadequate training and competence if they simply allow themselves to be grandfathered into compliance in this area.” By taking the qualification voluntarily, Fox argues that advisers will forestall any suggestion that they are not suitably qualified. Fox says, “For an existing adviser to demonstrate competence to sell lifetime mortgages under the FSA regime would require several things: evidence of experience of selling the product types for a period prior to the introduction of statutory regulation, that the volume of sales now is comparable and that sales under the MCCB regime were of an acceptable quality. “It seems clear that it will be difficult to satisfy all these requirements in every instance. What is more, the situation will be compounded by the fact that new product types and features now exist which did not exist in the previous regime.”

The CII’s new Certificate in Financial Planning and Lifetime Mortgage Activities caters for the regulatory examination needs. A specialist Lifetime mortgage activities unit is designed to give advisers an understanding of the principles of equity release, types of schemes available and suitability for the consumer. Holding the correct qualification will not only demonstrate to the FSA that the rule requirement is being met in full, but will also be a powerful tool in building customer confidence.