Equity Release Advisory Service to decline referrals
ERAS, launched earlier this year by the Mortgage Advisory Company Limited, focuses on specialist referrals from profess-ional introducers.
Explaining the reasoning behind the business decision, managing director Stuart Wilson said: “With the huge increase in new products, flexible options, monthly income, drawdown and lump-sum products we do not believe there can be many circumstances where the client’s interests are best served by borrowing money at 6 to 7 per cent and investing it in a product that either returns less than this or puts their capital at risk.”
He went on to add: “If we accept written approval from the senior compliance management of our corporate introducers that the client’s interests are best served then we will look at isolated cases but from experience we think they will be very isolated.
“ Our business is booming and building a solid reputation from introducers and clients alike and we want to raise standards still further and believe we are following the FSA principles in this respect.”
Dean Mirfin, business development manager at Key Retirement Solutions, said: “This is one of the hot topics for the FSA as it ultimately entails someone releasing money from their house at a cost to invest and getting lower worth returns from the investment.
“ The viability of this has to be examined. I can understand the decision not to accept these referrals as there is no way that it should be done for these purposes. If it was for an annuity to provide an income, that is a very different debate.”
• ERAS expects to announce a number of high profile corporate agreements in the coming two months.