The Equity Release Council’s Donna Bathgate and David Burrowes want qualifications to be changed so advisers have a broader view of later life lending options.
They want more advisers to be able to refer customers to different products where appropriate – whether the right product is a residential, equity release or retirement interest-only mortgage – rather than operating in solos.
Bathgate, addressing brokers at a HLPartnership event this month, said: “It’s become obvious to all of the awarding bodies that there’s been a shift in levels of expectations of knowledge and in time I think that will filter through.
“You could still use your specialism but a broader entry point in order to give you the knowledge to know when to defer cases.
“I think it would be a good thing. It would benefit everybody.”
Her colleague and chairman of the Equity Release Council David Burrowes agreed.
He said: “As the different options for later life lending grow the basic qualification and understanding for advisers needs to grow to enable them to signpost customers to the right advice that they need.”
There are currently a mixture of later life lending and equity release products on the market.
Aldermore launched a range of residential products marketed as an alternative to equity release this month.
Meanwhile ‘retirement interest-only mortgages’, which are repaid when the customer dies or goes into long-term care, are set to become more common after being redefined as standard mortgages by the Financial Conduct Authority in March.
One of the exam bodies offering exams to grant equity release permissions, as part of its Diploma in Financial Planning, is the Chartered Insurance Institute (CII).
Bathgate suggested CII’s CF1 module, which offers a basic understanding of the financial services industry, could provide a broader view of later life lending. Currently life advice only makes up a small part of the module alongside pensions, investments and insurance.
Advisers aren’t able to specialise until the optional level 3 qualification, Certificate in Equity Release, meaning they need to have already passed exams to be able to learn and be tested on equity release.
This limits the number of advisers learning about equity release, while some of the information in the module is outdated.
At least that is the view of Stuart Wilson, managing partner of training body Later Life Academy.
Wilson said: “They are not fit for purpose anymore.
“There’s a lot of very outdated stuff in the syllabus. There’s a lot of reference to obsolete products, like shared appreciation mortgages that haven’t been available for 20 years.”
Wilson blamed the Financial Conduct Authority for the state of exams, which he feels are driven by regulatory requirements rather than helping consumers.
Indeed, he admitted that he hasn’t entertained the notion of having the Later Life Academy’s training approved by the FCA “because they would mutate it into something that’s unworkable”.
He argued that advisers should have a broader knowledge of different mortgage products as well as understanding wider retirement issues – for example pension freedoms, the Care Act, wills and appointing a Lasting Power of Attorney.
He added: “At the moment we’ve got a crazy situation where the adviser says ‘all I’ve got in my pocket is equity release and that’s all I’m going to sell.’
“They say ‘I don’t understand those RIO (retirement interest-only) things – I thought that was something from Brazil.’”
He’d like to see some advisers operate like general practitioners by providing guidance on a number of issues rather than advising on just equity release or residential mortgages.
Therefore he would like to see a ‘generic later life exam’ offering a basic understanding of everything relevant to older customers looking for a mortgage.
Wilson said: “The regulator’s definition of competence is how many certificates you can plaster on the wall.
“For me that is not competency; it’s how we engage with the customer, communicate what the products offer and solve problems.
“If we are going to have exams we need them to be fit for purpose, to reflect a consumer’s needs in 2018.
“Otherwise they are irrelevant.”
Gary Webster, head of partnerships at the Equity Release Supermarket, agreed that qualifications need to be kept up to date, though he defended the inclusion of legacy policies like shared appreciation mortgages and home reversion plans.
He said: “With the introduction of retirement interest-only mortgages I am sure that in due course the relevant examination bodies will update the equity release qualification.
“While a focus on understanding and advising on current equity release plans and later life mortgages is important, advisers will come across legacy consumers on old plans.
“If the industry wants to continue with the level of expertise expected to achieve the best consumer outcomes then obsolete products will need to remain in the syllabus but suitably weighted.”
Matt Connell, director of policy and public affairs at the CII, seemed receptive to the idea of making changes to the way it treats equity release alongside later life advice.
He was open to presenting a broader view at its roadshows and in its good practice guides.
Connell acknowledged that equity release has been siloed off from other residential products due to history, as the product was less safe than its modern day equivalent in the 1990s.
Meanwhile he stated that the equity release module at CII has been separated so advisers can gain an understanding of the market all in one go.
With regard to qualifications however he echoed Wilson by making the point that the regulator determines much of what is included.
He said: “There is a need to think about equity release in a new way.
“In terms of the exams I think a lot of the decisions to put it at level 3 and the syllabus is based to a certain extent on regulation.
“The FCA has got information about what people need to know with protection, investments and equity release. We wouldn’t want to downgrade the exam.”
He added: “We make good practice guides that act as an introduction to what the regulator expects in this part of the market, and if it needs changing we should change that.
“We are reviewing the exams and the way that we support members with exams and materials more widely.
“We are always willing to take a look, particularly where we can see that changing things would benefit consumers and the public.”
He was open to exploring new ways advisers can gain a basic understanding of equity release and other later life products, so they can make referrals.
Connell said: “Can there be something of a ‘taster’ for advisers to make them aware of the products available? That’s something we can think about with the Equity Release Council.”