Stuart Wilson: RIO lenders should only accept business from equity release qualified advisers
Stuart Wilson, managing partner at Later Life Academy, has praised the growing number of retirement-interest only lenders who will only accept RIO business from mortgage brokers who have an equity release qualification.
He also called upon all other lenders in the RIO market to adopt a similar policy.
Wilson said: “At the heart of this issue is whether clients are getting the right product for their circumstances and in the later life lending space this could be a RIO, or it could be a mainstream loan with a higher maximum age, or it could be a lifetime mortgage.
“The point is that if you do not have the necessary qualifications and authorisation to offer all these products, you therefore can’t provide access to what might be the most suitable product, and then you are doing the client a disservice.
“Plus, down the road, if the client feels that they would have been better off in a product which the adviser could not offer, then the likelihood of receiving a complaint is greatly enhanced.
“Later life clients will have far more financial needs than just a RIO, or mortgage, or equity release, and those firms who will be must successful in this sector are the ones who are going to embrace all those needs and offer their clients all the necessary products and services.”
Mark Gregory, founder and chief executive of Equity Release Supermarket, agreed and also said RIO business should only go through equity release qualified advisers because they are better at identifying vulnerable clients.
He added: “If an adviser in the later life space is unable to consider equity release, then can they really offer the full spectrum of advice?
“Another important consideration is the vulnerability of the client. The equity release market has appropriate processes in place to identify vulnerable, older borrowers. These checks and balances do not exist in the residential mortgage market.
“We urge RIO lenders to only accept business from equity release qualified advisers, either directly or via the intermediaries qualified partner. Only by doing this can they be sure that the client has explored all their potential lending options.”
However, some mainstream mortgage brokers are opposed to the idea of only allowing equity release qualified advisers to give RIO advice.
Dale Jannels, managing director of Impact Specialist Finance, said: “I disagree. Lending into later life is most definitely more mainstream these days, especially where the customer is probably too young for equity release at ages 55-75 ish.
“Most are still working at this age bracket and many lenders are happy to extend the mortgage term to this age.”
David Hollingworth, associate director of communications at L&C Mortgages, added: “I think the regulator has brought RIO into the wider mortgage space to increase its availability and distribution, so limiting that range of customer options would seem counter intuitive.
“Interest-only borrowers are a type of borrower that can be well served by mortgage advisers with products at disposal in the mainstream mortgage space. Brokers need to be aware of the alternatives but there’s definitely a place for RIO in the mainstream mortgage market.”
Will Hale, chief executive at Key, has seen RIO lenders restrict their distribution to advisers who hold the equity release qualification and highlighted the importance of referrals.
He said that although he understands it from a risk perspective, he believes it’s important not to create barriers for advisers wanting to help customers in the later life lending sector.
Hale said: “To ensure good outcomes for customers it’s vital that equity release is considered alongside RIOs and vice versa. Many advisers recognise this and we work with a wide range of introducers who refer customers to Key Partnerships.
“Establishing a referral relationship with a trusted specialist partner is a great first step for advisers to address the needs of their customers in this segment of the market.
“By working closely with both mainstream brokers and specialist later life advisers, RIO lenders, and indeed equity release lenders, we can help build awareness of the range of solutions available and ensure a safe pathway for customers to receiving the holistic advice they need.”
Jon Tweed, sales director at OneFamily, added: “The later life lending market is converging. Whether the mortgage adviser has the equity release qualification or refers cases to an equity release specialist, it’s about the education, training, understanding and signposting of all the later life options.”