The equity release market is divided over FCA proposals to introduce a standalone qualification that could see more advisers pile into the market.
The regulator proposes either a standalone equity release qualification or a means of achieving competence by topping up existing pensions or investment qualifications.
The FCA’s consultation paper on exam papers, published last week, says: “Some stakeholders suggested that some IFAs may not be offering equity release because, before they can do so, they need to be appropriately qualified for a product (mortgages) that otherwise they have no interest in selling.
“We would like a better sense of the numbers of those without an appropriate mortgage qualification who would be interested in achieving the relevant qualification to sell equity release.”
But Key Retirement technical director Dean Mirfin says the FCA proposal for a standalone qualification could lead to consumer harm.
He says: “An equity release standalone qualification is dangerous and could be seen as a warning sign for consumers because [advisers] are asking for an easier route into the area without having completed mortgage exams.
“In order to advise you need a certain level of knowledge, so I don’t know why this has even been put forward for consultation. I’m quite shocked to see this being brought up.
“It will be interesting to see how the IFA fraternity as a whole respond to this as they are quite proud of their levels of qualification. If we see so-called dabblers in equity release, this could undermine that and lead to similar situations in other areas, such as pensions.”
But the Equity Release Council says the FCA proposal would increase access to the market and help consumers. Chairman Nigel Waterson says: “We welcome the regulator’s continued interest in exploring steps to support the equity release market and help more consumers investigate the option of using their housing wealth to boost their finances in retirement.”
Bower Retirement chairwoman Andrea Rozario says equity release advice is much closer to general financial advice than pure mortgage guidance. She says: “I feel strongly that having a standalone qualification will encourage advisers to take that qualification and open up the market in terms of distribution.”
More 2 Life channel marketing director Stuart Wilson also welcomes the FCA proposal.
He says: “We are strongly encouraging more advisers to move into retirement lending and are pleased the FCA is listening and starting to address this issue.”