Last year, the Financial Conduct Authority (FCA) published the Mortgage Rule Review, which included the suggestion to mandate equity release qualifications to ensure consumers got holistic advice.
In its roadmap released last month, the regulator said it would be exploring options, and a market study will be undertaken this year to assess the sector’s readiness, but some advisers are already adding more qualifications to give consumers a well-rounded offering.
An early realisation
Louise Stevens has been an adviser for around 18 years, but it was only after returning to Coreco in 2022 that she decided to get her Certificate in Regulated Equity Release (CeRER).
She told Andrew Montlake that she really wanted to expand into the sector before she realised there would soon be a “big turn in the market”.
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She has been advising on equity release for around a year and was prompted by her grandparents’ experience.
“I grew up with my grandparents, and my grandparents went bankrupt. We lost everything, and they were really struggling, so I’ve always had a soft spot for later life clients,” Stevens said.
She added: “My grandma was deaf, as well. So, in terms of the vulnerability side of things, I really understand and want to help those clients.”
Coinciding with her pivot to the later life market, Stevens noticed that many lenders were changing their criteria and products because of market trends, while others, like Perenna, were offering mortgages that stretched into retirement age.
Stevens said this enriched her overall approach to advice, saying: “Now when I deal with first-time buyers, I’m better at making sure that they take [as] short a term as possible. I see the benefit in having that equity, and the quicker you pay your mortgage off, the more options you can have in later life.”
When she first added equity release to her capabilities, Stevens said she wanted to work across both the mainstream and later life sectors as she felt it was important to be well-informed, but was told to focus on equity release.
Then, the FCA signalled its expectations for the advice market to evolve, Coreco was acquired by OneDome, and, subsequently, Stevens was allowed to offer a more holistic service.
“It was a little bit like I was one step ahead. At the time, it felt like I was the only adviser working across both, but now I’ve noticed there are more,” she added.
Stevens has also inspired other advisers to follow her lead. Since winning the Later Life Lending Broker award at the Mortgage Solutions British Mortgage Awards last year, advisers have reached out to her asking for tips on broadening their qualifications, including a large broker firm.
Stevens said she did not see it as competition, adding: “There’s enough business for all of us. Our competition is the direct channels. The more awareness they have of later life products, the more clients are going to get the right advice.
“I think people are starting to wake up now.”
Stevens said advisers did not need to be experts but should have some knowledge because there were many times she obtained a mainstream mortgage for older clients, who likely would have been recommended a later life product by a siloed adviser.
She has also helped clients by advising they take slightly shorter terms or make overpayments to improve affordability when transitioning from interest-only mortgages, as well as suggesting they see a pension or financial adviser.
Stevens is part of the Equity Release Council’s adviser forum and helped the council collate feedback to the FCA’s discussion paper. She said she was unsure about the idea of mandating equity release qualifications, saying: “The qualification doesn’t teach you how to do your job. It just teaches you compliance”.
Becoming more confident and informed
She said advisers could benefit from training not just for later life mortgages, but also other specialisms in the mortgage sector and wider financial planning and services.
Stevens is undertaking a care qualification and said this was already helping her adapt her approach when suggesting clients consider these costs.
She said it was “really good” that a change in approach was on the regulator’s radar, adding: “I’d like to see more awareness, training and development for advisers and just more awareness in the industry so that people are not scared of the options that they have.”
Steve Case, consultant and adviser at 1st UK Mortgages, said his firm recently added later life advice to its qualifications, “mainly to help clients aged 55-plus who require remortgaging and equity release options that are rejected by mainstream lenders”.
Case said the FCA’s plans to introduce a requirement for mortgage advisers to provide later life advice, including retirement interest-only (RIO) mortgages, were in line with a rise in later life lending.
He added: “By the middle of this year, our team will have completed their CeRER training to enable them to assist with lifetime mortgages with secured loans we currently undertake.”
1st UK Mortgages is also coming across more older borrowers using equity in their homes to fund upgrades and support family members to keep costs down in the current expensive environment.
Case said: “Adding later life advice to our work will allow us to expand our services, as many of our clients are using a combination of pensions, rental income and part-time income to achieve lower monthly payments. RIO mortgages pay back the loan when the property is sold, when you die, or when you enter into long-term care, therefore making them ideal for non-standard cases, which we deal with on a regular basis.
“As regulatory changes continue to open up the marketplace, we anticipate a steady flow of new clients from these trends.”
Keeping an eye on the market
Deepak Shukla, CEO of Pearl Lemon Brokerage, said his firm did not actively offer later life advice to clients at the moment, but he was keeping an eye on activity within his firm and across the market.
“As a broker, you naturally end up speaking with peers, compliance providers, lenders and training bodies, so you get a fairly clear picture of what advisers are doing in practice rather than just what’s being announced,” Shukla said.
He said the decision for his firm not to offer later life advice now was “deliberate rather than due to lack of demand”.
Shukla added: “We’ve seen a steady increase in later life enquiries over the past 12-18 months, which is what prompted us to start assessing the qualification routes, compliance burden and operational changes required.”
Shukla said that internally, Pearl Lemon Brokerage has “begun the groundwork, reviewing qualification pathways, speaking with networks and insurers, and mapping out how later life advice would sit alongside our existing mortgage and protection offering”.
He added: “The aim is to introduce it only once we’re confident it can be delivered properly and compliantly, rather than bolted on as a reactive add-on.
“Assuming timelines stay on track, we expect to make later life advice available once adviser qualifications and supervision structures are fully in place, rather than rushing to meet short-term demand.”
