Advisers hampered by Equity Release Council policy change

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The Equity Release Council stands accused of hampering equity release advisers by effectively barring many from joining the trade body.

Last November the ERC changed its membership rules so that appointed representatives could no longer join the trade body unless their parent networks did too.

However, nearly seven months on, many networks have not joined the ERC, making it impossible for many ARs to be members.

Nevertheless, Intrinsic, Light­house Group and Personal Touch Financial Services have all joined the ERC since it changed the rules.

Mortgage Intelligence, Stone­bridge and Tenet Lime are in talks to join but have not signed up yet.

But many networks, including large groups such as First Complete, Openwork, Pink and Sesame, have not joined.

The ERC decision was criticised by brokers and the broker trade body. Association of Mortgage Inter­mediaries chief executive Robert Sinclair says: “I think it is a shame that the council has taken this view.

“From a contract perspective, ensuring that they have commitment from the individual at the top of a firm makes sense, but many appointed representatives used their council membership as both a badge to give consumers trust and to benefit from the edu­cation and information that came with membership.”

Sinclair adds that his “biggest concern” is that the ERC’s decision came as a surprise to the membership and was not discussed or consulted on as publicly as it could have been.

He says: “All organisations have the right to limit membership, but changes like this need to be in all parties’ interests.”

London Money director Martin Stewart says: “It’s one of those classic unintended consequences. I think they’ve left a lot of brokers high and dry there.”

Sixty Plus equity release specialist David Wright says the market needs more equity release advisers, not fewer.

He adds: “So let’s remove barriers to getting people involved as best they can.

Networks, notoriously, are averse to equity release, and that could be part of the problem, but let’s try and open doors, not shut them. Let’s get more adviser members on board; that can only be for the greater good of the sector.”

ERC chief operating officer Donna Bathgate says the trade body made the change “in response to the increasing diversity of firms operating in the market, with the aim of ensuring equal treatment across adviser communities and supporting consistent promotion and standards of advice for consumers”.

She adds that the ERC has been talking to current AR members who joined up before the changes and who are due to drop out of the council when their membership renews.

For these cases the ERC has offered to talk directly to their networks.

Bathgate says: “We have been very encouraged by networks’ response to the new criteria: to come together and participate in the evolution of advice and standards in a rapidly growing area of the market.”

Bower Retirement chief corporate officer Andrea Rozario, whose firm is an ERC member, says being part of the council has many benefits.

She says: “We are able to talk to other members and foster good working relationships across the board with solicitors, surveyors, providers and so on. Members have to abide by a code of conduct, and I think it’s important to be part of that.”

First Complete and Pink, which together have more than 1,500 members, are keeping a watching brief with ERC membership.

First Complete sales operations director Toni Smith says: “We expect lending into later life to be an area of growth for our network businesses and, as such, will further develop our offering. Membership of associated trade bodies will take place as part of this, as with any product and proposition development.”

Openwork currently does not permit its members to handle equity release, and asks that they refer business on.

Openwork mortgage director John Cupis says the network will review its stance this year, but adds: “To have the economies of scale to support and oversee supervision of equity release advice hasn’t been, up until now, cost justifiable.”