This follows research carried out by the FSA into the quality of advice provided by both product providers and intermediaries involved in this market.
AIFA was pleased that when reporting on its findings, the FSA differentiated between the types of firms in the market and their levels of activity. The research identified that those intermediary firms which have committed to the lifetime mortgage market and have put in place effective “systems and controls” have been meeting and in some areas, exceeding, the regulatory requirements. However, the research also identified some intermediary firms writing occasional business in this market which are failing to give customers the quality of advice expected by the FSA.
Chris Cummings, director-general, AIFA, said: “It is good to see significant improvements in the way in which advice is being given on lifetime mortgages. The equity release market is a fast growing sector attracting a great deal of consumer interest and so the advisory profession owes a duty of care to its clients to act professionally. We are not surprised to learn, however, that where firms are not fully committed to this market some are falling short of the standards required.
“This is a specialist market and if firms are not prepared to put in place the necessary systems and controls and to undertake the training needed to ensure they are competent to give advice in this area, they should refer the business to specialist advisers.
“We support the recent announcement made by Safe Home Income Plans (SHIP) that from August 2007 their members will no longer accept business from advisers who do not hold an appropriate lifetime mortgages qualification. AIFA has consistently called for mandatory qualifications in this market. We believe SHIP’s decision will encourage those advisers who are not serious about this business to leave it to those who are.”
Cummings continued: “The FSA has pinpointed several areas where firms in general need to make more progress. We will communicate these findings to our members and continue to work with the FSA to improve standards in the areas identified. We are committed to supporting AIFA members who are advising on lifetime mortgages and to helping them to keep abreast of the complexities surrounding this market.”
