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12 January 2017

A survey by the Society of Mortgage Professionals and the Personal Finance Society, in the wake of the FCA announcing a consultation into the merits of a standalone equity release qualification, has found support for the idea within the adviser community.

Sixty one per cent of the 1,000 members questioned said they thought it should be a separate top-up to existing pension and investment qualifications. Meanwhile, 77 per cent think investment advisers that don't currently hold mortgage qualifications, particularly those active in giving later life advice, would seek to acquire a standalone equity release qualification.

Society of Mortgage Professionals operations manager, Vishal Pandya, commented: “The results show a clear appetite amongst advisers for a dedicated new qualification, to adequately reflect the recent rapid growth in the sector.

“Our members would appear to agree with the FCA that the current structure of the existing equity release qualifications may be a barrier to a wider number of consumers wishing to access the product.

“Lifetime mortgages are the main form of financial product consumers use to release equity, so when the Appropriate Examination Standards (AES), for equity release were first developed it was natural to use an approach that built on an existing knowledge of mortgages. This reflected and reinforced mortgage brokers being the primary distributers of equity release products,” he explained.

“Our on-going work looking at competition in the UK mortgage market has confirmed that many stakeholders believe that some independent financial advisers may not be offering equity release because they need to be appropriately qualified for a product (mortgages), that otherwise they have no interest in selling.”

However, Pandya cautioned that although a standalone qualification could increase the number of advisers than can recommend the product in the long run, this could paradoxically be a concern if the advisers doing so were not suitably knowledgeable about conventional mortgages - given that they may not be level 3 mortgage qualified.

He also pointed out that any re-fashioning of content or decoupling of equity release from the mortgages unit would need to be designed with sufficient mortgage content in the equity release component, in order to guarantee proper levels of competence and the fair treatment of customers.

“This would be crucial due to the strong links between mortgages and equity release, particularly in respect of some of the newer mortgage products available to older borrowers,” he stated.

“In the third quarter of last year alone, the value of equity release lending increased by 26 per cent year-on-year to £571.6m. It is no longer a niche market and the adviser community needs to reflect this by giving serious consideration to a new qualification.

“That being said, it seems unlikely that there would be an immediate surge in numbers in what is still deemed to be a specialist area with a relatively limited, albeit growing, market share.”