Having successfully swatted through his exams, Simon Chalk examines the current equity release qualifications and passes on his study tips
The equity release market has been under the watchful gaze of the FSA since day one of regulation. The damning findings of the recent FSA mystery shopping exercise gave a shot across our bows as close as we would dare risk.
Sales procedures for equity release must be absolutely spot-on. Under-pinning this is the training and competence of those in the role of dispensing advice or supervision.
Until recently, no formal educational programme or qualification specifically for equity release existed but that changed when the two main examining bodies – the Chartered Insurance Institute (CII) and the Institute of Financial Services (ifs) – unveiled their new qualifications in the Spring.
Both of the qualifications are regarded as ‘appropriate’ by the Financial Services Skills Council (FSSC) – the body responsible for setting training standards in our industry.
The FSSC determines ‘indicative content’, ‘outcome’ and ‘attainment levels’ for the study material and exams. In other words it establishes the key areas that should be included in the syllabus, what the student should learn by undertaking the course and finally how that understanding should be measured and proven.
Study tips
Having gained both of the new exams, I thought I would share my experience and hopefully offer a few tips to potential candidates. Both exams follow the same FSSC content, outcome and attainment level requirements, are multiple-choice based, require the same study time and have a pass mark set at 70 per cent.
It is recommended that you buy the coursebook and, depending on your experience, a range of study-aids (both paper-based and CD-rom or online) are offered for a reasonable additional outlay. 60 hours of study is recommended although those familiar with the subject should manage with 30-40.
CII: CF7 Lifetime Mortgages Module
This lifetime mortgages module sits within the CII’s new Certificate in Financial Planning (which replaces the old FPC) and is available as an optional module.
The exam lasts two hours and comprises 50 multiple-choice questions and five case studies, each with five multiple-choice questions.
The exam is old-style classroom-based, using pencil and paper, which clearly suits many candidates. Be very careful when marking down your answers on the sheet provided as it is ‘read’ by a computer which could misinterpret your chosen response if you are sloppy with your handiwork.
Examination sittings are quarterly with the remaining 2005 dates being 19 July and 18 October. Hence should you fail, you will need to wait three months for a resit.
Results can be found online a couple of weeks after the exam and a certificate of sorts is posted several weeks later.
CII does not offer a distinct designation for successful lifetime mortgage candidates.
ifs: Certificate in Lifetime Mortgages
To achieve the Certificate in Lifetime Mortgages, you must pass or already hold CeMAP (or equivalent such as MAQ) and the Investment and Risks module from CeFA (or equivalent such as FPC2).
The exam comprises 50 multiple-choice questions and three case studies, each with ten multiple-choice questions.
The ifs exam is taken at a computer terminal with answers selected by clicking on your chosen response. You should have ample time to revisit any questions if you want to change your answers. You cannot get by in life nowadays without computer skills so this method should not present any problems.
Exam sittings can usually be booked with short notice and taken on a weekday at a time to suit. Hence a resit could be taken just a couple of weeks later.
Results are given instantly with a certificate posted within days.
ifs allows successful candidates to use the designation CeLM at no extra cost and with no need for expensive annual subscription fees.
Importance of qualification
We now have the opportunity to follow a formal route of study and ultimately to gain a qualification in the subject so there can be no excuse for failing to do so.
I would encourage all firms to prevent advisers from engaging in the equity release market until an appropriate qualification has been gained and in the interim supervising every single sale with the adviser considered to be undergoing training.
Grandfathering is an option for those holding CeMAP or MAQ prior to 31 October 2004 but you really should forget this as time-served experience is of no comfort when our profession hasn’t been subjected to such intense scrutiny before. We are starting with a cleansheet here so get studying and pass one of the appropriate exams.
A final word of warning in case you feel complacent when the rather thin-looking coursebook arrives – the exams questions do not just revolve around lifetime mortgages even though they account for 98 per cent of the equity release market.
Many questions will test your knowledge and understanding of means-tested benefits, local authority grants, taxation and annuities. And look out for the red herrings.
Simon Chalk is mortgage planner at Mortgage Portfolio Services
