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Older borrowers could end up with wrong deal after FCA retirement interest-only mortgage reclass, critics say

Older borrowers may not end up with the right product for their needs as the lines between equity release and mainstream mortgages become increasingly blurred, industry experts fear.

Availability and choice of later life lending is set to be boosted after the Financial Conduct Authority (FCA) recently reclassified retirement interest-only mortgages from a lifetime mortgage to a standard mortgage.

The FCA’s change means mainstream mortgage brokers can now offer advice on retirement interest-only products without having to pass specific equity release exams.
As a result, Vernon Building Society recently said it would no longer require brokers to hold the equity release qualification when advising on its retirement mortgage range.
It comes as mainstream mortgages have become more accommodating to older borrowers and increased innovation in equity release.

However, critics are worried borrowers won’t be given their full range of options or could deal with advisers without adequate levels of the knowledge of the later life market.
Stuart Wilson, managing director of the Later Life Academy, said: “This re-classification could mean a lot of mortgage brokers, who don’t have a later life and equity release experience or qualifications, thinking this is an opportunity to get involved in this sector without requiring the qualifications needed for equity release advice, or the ongoing training, or the ongoing resource commitment.
“It’s a reason why I am deeply worried by the Vernon’s decision that it won’t be requiring mortgage advisers to hold the equity release qualification in order to arrange its retirement mortgage.

“We need to be training advisers in later life lending, in its very broadest sense, rather than placing products in silos – as this decision by the FCA does with retirement interest only.
“Presently, and this decision heightens the distinction, mortgage advisers are not required to go through the same process as equity release specialists – even though the risks are the same.
“I think this is dangerous and could result in a lot of mis-selling claims further down the line if it can be proved that the product recommendation was not the most suitable for the client.”
His concerns were echoed by Nici Audhlam-Gardiner, managing director of Lifetime Mortgages at OneFamily.
She said: “It’s great to have more solutions, but it’s quite complicated in terms of which is the right product for a borrower.

“Customers are unlikely to be presented with all of their options by the same adviser – and they are unlikely to go to two different advisers for their needs.
“As we go forward, those are worries that customers may end up with the wrong solution.”

This was reported today in Mortgage Solutions online and there are very few in the later life lending space more experienced than Stuart Wilson of the Later Life Academy, a major voice in the Equity Release and later life lending world. 

If we are to place consumer outcomes at the very heart of what we all do; why allow advisers who do not have the qualification, advise to this potentially vulnerable group.

If you feel unsure of your options, please get in contact with your Lifetime Mortgage Solutions contact. Every one of our team holds both mortgage and Equity Release qualifications and we will search the entire market to ensure that our clients get exactly the product that fits the clients' needs. 


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