Regulation will give all-rounders an edge

There is now less than a month to go before home reversion regulation comes into force. Many companies are in the final throes of their preparations for the big change.

But that said, a number appear not to have fully appreciated its impact. Those that are applying for permission (or who already have it) will be well aware of the regulator’s core requirements.

But the concern is whether those advisers and firms that are not applying for permission but plan to remain authorised for lifetime mortgages are aware of the implications.

As I discussed in Mortgage Strategy a while ago, regulation brings with it a raft of requirements that will also affect those remaining as lifetime-only advisers.

The main and most noticeable change concerns initial disclosure documents. Firms must now be totally clear about what they are advising on.

From April 6, an IDD must clearly indicate whether an adviser offers lifetime mortgages only, home reversions only or equity release. Equity release applies to those advising on both lifetime and home reversion products.

This clarity will also need to be applied to financial promotions.

The regulatory change has substantial implications for advisers who limit their advice to lifetime deals or home reversions.

There are also considerable marketing and business considerations to be taken into account. First, clients will be able to make a clearer choice and may opt for advisers offering equity release products.

Second, advising on one of the product types does not negate the requirement to consider the other as potentially more suitable for clients.

The line between offering both or just one product type is narrow and independent financial advisers and whole of market brokers will be hard pressed to justify limiting the advice they provide.

So April’s regulation gives advisers who offer the full range a considerable marketing edge. No doubt they will use it to the full.