Equity Release Council welcomes FCA vulnerability guidance

Michael Lloyd

October 8, 2019

The Equity Release Council has welcomed the FCA’s draft guidance on vulnerability.

The FCA has finished consulting firms on its draft recommendations.

In its Vulnerability Consultation, the FCA proposed firms should understand the needs of vulnerable consumers and ensure the level of customer service they provide meets their needs.

It also said that firms should design their products and services to take into account their needs and communicate information to vulnerable customers in a fair way.

David Burrowes (pictured), chairman of the Equity Release Council, said: “We wholeheartedly support the FCA’s focus on the issue of vulnerability to ensure fair treatment of consumers across the financial services industry.

“The Council’s founding purpose in 1991 was to introduce safeguards which have established consumer protections at the heart of the equity release market.

“This included embedding the guarantee of independent legal advice into the process of taking out an equity release plan, alongside clear product standards.

“The provision of legal advice alongside regulated financial advice and provider assessments is a critical step towards detecting potential vulnerability and understanding the appropriate steps necessary to support consumers.

“For example, the Mental Capacity Act identifies solicitors among those professionals who are capable of assessing mental capacity.

“Legal verification ensures that a customer has the capacity to understand the terms of an equity release product and its implications before deciding to go ahead, with a qualified medical opinion sought in the event of any doubts.”

Burrowes said that customers are also encouraged to have open conversations with family members or beneficiaries before committing to any decision, with family often invited to join conversations with their adviser.

He added: “As the nature of modern retirement evolves and efforts continue to move on from traditional silo-ed advice, this experience can be channelled to benefit a broader range of consumers.

“The council is working closely with other financial services trade associations to consider how qualifications can evolve to best equip advisers in the broader later life lending sector.

“This includes discussions about embedding minimum standards of training for frontline staff, which can enable a wide range of firms and colleagues to spot signs of vulnerability and understand the individual company’s policy on vulnerability.”

Alice Watson, head of marketing and communications at Canada Life Home Finance, also welcomed the proposals.

She said: “It’s reassuring that the FCA has consulted with industry to establish the best ways and means to protect vulnerable customers.

“Customer vulnerability is an incredibly complex issue. The best solutions to identifying vulnerable customers and deciding on the most appropriate safeguards will require input from policymakers and wider society, as well as from industry and the regulator.

“Canada Life Home Finance has worked with the Money Advice Trust to better equip our frontline staff with the skills and knowhow to identify vulnerable customers, so they can get suitable help and advice.”


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