Weighing up the benefits of grants

Continuing my theme of grants from last week, I\'d like to remind readers of the Financial Services Authority\'s requirements when considering the suitability of equity release transactions.

MCOB 8.5.4 states that once a broker has discussed all the relevant issues with a client they should have sufficient grounds to conclude that “the benefits to the customer outweigh any ad-verse effect on either the customer’s entitlement to means-tested benefits and their tax position, such as the loss of an age allowance”.

Brokers should also ascertain from the information provided that alternative methods of raising funds such as local authority grants are unsuitable.

Weighing up the advantages of means-tested benefits is straightforward, especially using specialist software such as Equibis.

The rules also state that brokers who specialise in one sector of equity release must pro- vide evidence of why, say, a lifetime mortgage is more suitable for a client than a home reversion plan.

Those electing only to advise in one sector – for example, re-version providers that sell di-rect – must provide evidence that a lifetime mortgage has been discussed as an option and why this has been discounted.

But working out whether a local authority grant is suitable poses a challenge to brokers and clients. This is because grants are not available for many individuals and the rules also vary according to where applicants live.

For example, English and Welsh councils may offer grants, provide equipment or practical help and also offer advice.

Each council can set its own rules but these must be documented so residents can find out about them.

It’s important to stress that individuals may be able to get help via their local authori-ties but this may not be free. Many could receive loans or be referred to other organisations for loans, but these will usually be on commercial terms.

A great place for brokers to start their research is to visit a charity website such as www. helptheaged.org.uk, where they will be able to search for grants and find a lot of helpful information on the subject.