Equity release is the most well-known part of later life lending but it is a specialist area of finance and those who advise on it must be suitably qualified – and rightly so.
Homeowners aged 55 and over are eligible for equity release but it is not always right for everyone and can be complex.
This is why the Financial Conduct Authority (FCA) carried out a review last summer into equity release advice and although most of its findings were positive, some concerns were expressed.
The FCA said some of the advice given was “not up to scratch” and it was particularly worried about vulnerable customers.
There were three main issues raised in the review. First, the FCA was concerned that not all advisers sufficiently considered clients’ personal circumstances.
The second worry was advisers not challenging the reasons given by customers for looking at equity release. Third, the FCA found some firms could not show the evidence that their advice was suitable.
We conducted research among our club members and found that 43 per cent thought equity release and later life lending would grow in the next 12 months; while more than a third were actively looking to expand into the sector.
As a mortgage club we recognised that our members should have access to this important market, which is why we have developed an equity release panel and a referral partnership.
This means our members can choose the best option for advising their clients.
While not all brokers are qualified to advise on equity release, it doesn’t mean they have to turn clients away.
It’s easy to pass the business onto qualified lifetime mortgage specialists who can advise, not just on equity release, but all later life lending.
Many older people have mortgage requirements and by referring the client to a specialist, brokers can still earn a referral fee.
Even qualified advisers can refer clients, especially if they don’t do much equity release business or the case is complex and a specialist would be in a better position to advise.
The other option is for brokers to pass business to lenders who specialise in later life lending such as retirement interest-only (RIO) mortgages but don’t offer equity release.
There are a few building societies who operate in this space.
There is no reason why a good broker should not be able to help clients with later life lending needs, it’s just knowing where to turn.