MIp22-23_1209:MI 12 Jan 24/11/2009 16:34 Page 3
Equity release
23
a positive step and
incorporating a cooling-
off period into the process
is helpful but the quality of
the advice is not just about
process.
Entry requirements
The proposed full regime puts no ‘entry
requirements’ in place for advisers apart from
the standard obligation to be competent. On
and then the basis that the adviser should be
again at the discounting all other options before advising
pre-offer stage that the SRB is the right product, it is
at the beginning of surprising the FSA has not placed any
the 14-day cooling- appropriate exam requirements on these
off period. This is individuals. It seems sensible to expect the
presumably designed to adviser to hold the mortgage and equity
ensure that the release qualifications to demonstrate their
customers are aware of knowledge and understanding of the
the lack of long-term important options which must be discounted
security with an SRB. first. Effectively the full regime allows anyone
The full SRB regime to easily become a SRB adviser. And
consultation suggests individual adviser registration should also be
there be a single sales included for all the same reasons it is being
standard, i.e. no considered in the mortgage market area.
difference between non-
advised and advised. All Lack of clarity
advisers will be expected to Although there are some other points within
assess affordability and the the suggested regime relating to valuations
appropriateness of the product and informing creditors of SRB, the rest of
for each sale. This is in line with the consultation is fairly standard. Our major
the new MMR thoughts. worries are therefore the distinct lack of
However, the other MMR clarity being made between HRP and SRB,
proposal of registering all and the fact that while the FSA acknowledges
advisers individually has not that security of tenure is a major risk of the
been incorporated within SRB scheme, it has not taken a firm stance to
this consultation. This is really protect these largely vulnerable people.
surprising as the FSA With possible further drops in property
seems to recognise prices predicted in a double-dip ‘W-shaped’
So how are the FSA that the advice recession and with further increases in
proposing to deal with aspect is a huge risk unemployment it seems even more important
this vital issue? area because the to get this right. The fact remains however
Firstly, it has introduced into the advisers are unlikely that in the great scheme of things this is a
sales process a 14-day ‘cooling- to have been small, niche market and may not be as high
off period’ and an absolute previously regulated so up on the FSA’s ‘risk list’ as it should be. We
requirement on advisers to may not have appropriate ‘clear would hope these issues are rectified before
issue an FSA consumer processes in place for delivering the full regime is introduced otherwise the
factsheet which must be advice’. The clarity of explanation of potential for consumer detriment will still be
provided at two stages in the the product and possible options are significant – something regulation was
process – firstly at the initial adviser meeting critical. Removing the non-advised option is supposed to put an end to.
www.mortgageintroducer.com December 2009 Mortgage Introducer
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