Education in the later-life lending space

Stuart Wilson

October 9, 2019

stuart wilson air group

Stuart Wilson (pictured) is chief executive at Air Group

There’s no doubting the importance of qualifications and continuous professional development (CPD) within the financial services space and in particular the later life market – after all, we set up an academy to help advisers secure the right qualifications and keep their knowledge right up to date, so you can see the belief we have in ensuring this is at the forefront of all practitioners’ minds.

However, as the later life space has developed, and more product options are offered, one can’t help wonder whether there is a disconnect between the regulatory situation when it comes to products like equity release and RIO, the requirements on advisers, and whether the system we currently have is truly fit for purpose and provides the holistic financial advice that is absolutely necessary for later life clients.

At present, I – along with many other stakeholders – are minded to think it does not, and while the fact that mainstream mortgage advisers can offer RIO recommendations but don’t need to be qualified or authorised to offer the equity release alternative, is a real sign of this, one can’t help wonder whether the regulator wants, or is going to, square this particular circle anytime soon.

I suspect not. Which was also the view of AMI’s Robert Sinclair at last month’s FSE London show during the presentation by Equity Release Council chairman, David Burrowes.

During that session, Sinclair talked about the existing qualifications in both the “pure mortgage and equity release markets” not being “as deep or robust as responsive market participants would want them to be”.

In other words, the market has recognised the inherent problems with the current qualification set-up in the later life space, but we don’t seem to have a regulator which is going to address this. So, given that, what do we do next?

Well, the good news is that the industry is not standing still and waiting for action in this area, and accord to Sinclair it will be our industry’s professional bodies who will “step up to the plate and make the changes necessary”.

The Council’s Burrowes echoed this approach saying it was already involved in industry discussions in this area and this would be tied into its own review of the competency framework – an update of which is likely to be published in November.

And that’s an important step forward because, despite the fact that I would prefer we already had a cross-industry approach to advisers’ activity, knowledge and qualifications across all later life products, the fact of the matter is that some lenders/providers differ in their interpretation.

While a number of RIO lenders, for example, won’t allow non-equity release qualified advisers to offer their products, because of that concern around the client getting the most suitable product, others do not take such an approach. Which surprises me to this very day, but it seems that the need to secure business can sometimes cloud the (common) senses.

However, what perhaps could be done here, is to make those qualifications for advisers who do wish to give a fully-rounded later life advice service to clients, much more robust, ensuring that the syllabus covers all options and that the adviser has proved their knowledge and experience when it comes to deliberating and reviewing the product options available.

At the end of the day, do we want a fragmented approach to later life advice? I doubt it very much, not least because we as an advisory profession, are opening ourselves up to a number of potential issues in the future, not least a raft of complaints from clients who might come to think that they did not get the product they should have, simply because the adviser wasn’t able to advise or recommend in that space.

That’s not a position any of us wants to be in.

And therefore, with an interjection from the regulator on these matters seeming unlikely, it is perhaps quite right and proper that the industry gets its own house in order.

Let’s not forget that we are potentially talking about more vulnerable clients in this space, in a sector which the FCA still feels is higher risk, and therefore we as participants in the provision of advice need to be utterly confident that we are offering the right advice across the whole gamut of product options, every single time.

Not forgetting how tied up other later life issues are with these client wants and needs – can we truly section out pensions, investments, benefits, long-term care, inheritance, and all other later life issues, from the potential equity release or mortgage loan needs? Again, I don’t think so.

We therefore await the next steps in producing this competency framework with much interest, and we would certainly urge all advisers active in this space, or those that wish to be, to make sure they are fully comfortable with their current authorisations, qualifications, market knowledge and understanding, to ensure that when dealing with later life clients you have every possible base covered.

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