CII to raise equity release standards

A certificate in equity release from the Chartered Insurance Institute has been given the go-ahead from the Qualifications and Curriculum Authority, reports Financial Adviser (15/3/07).

The certificate is designed to help advisers and brokers meet the regulatory requirements for lifetime mortgages and home reversions.

New rules from the FSA, which come into force on April 6, require anyone advising customers or overseeing non-advised sales of home reversions to pass an appropriate exam.

The certificate is made up of four units; the CF1 for UK financial services, regulation and ethics, the CF6 for mortgage advice, the CF7 for lifetime mortgage activities and the HR1 for home reversion plans.

Bob Bullivant, deputy director of the CII, said: "The FSA stipulates that existing advisers have two years from April 6 in which to pass the home reversion top-up. We have moved extremely quickly to develop a solution to enable advisers to meet the FSA requirements well within that period. Consumers deserve the best possible advice and I would encourage all advisers involved in equity release to get their knowledge up to the required levels as a matter of urgency."

In January, the CII fast-tracked the development of a home reversion plan top-up for advisers who held the CF7 exam, but responded to calls from the Financial Services Skills Council to create a complete solution.

The certificate has been added to the FSSC's appropriate examinations list.

Advisers who complete the certificate and are members of the CII will be able to use the designation Certs CII (MP & ER) to demonstrate their competence.

Brokers demand clarity on rates

Brokers have called for lenders to be more up-front about interest rates offered on lifetime mortgage products, after both Norwich Union and Prudential were named as charging higher rates through direct channels compared to sales through intermediaries, reports Mortgage Solutions (12/3/07).

Norwich Union's annual rate on lifetime products is 6.65% through direct selling, compared to 6.3% through intermediaries. Its drawdown product is 6.8% direct, versus 6.35% through an adviser. Elsewhere, Prudential has an annual equivalent rate of 6.69% direct, ­compared to 6.37% intermediated.

The issue was raised at the London leg of the Equity Release Roadshow. Dean Mirfin, business development director at Lifetime Advisory Services, said many brokers and clients were not aware of the differences. He commented: "The lender's argument is that it has a sales force to run, but over 50% of clients went direct last year, and if they knew about this, they would go elsewhere."

Both lenders defended their interest rate policies, and said they would ensure borrowers had reviewed all the available options.

Prudential said its higher rate for direct sales was implemented to cover costs of administration and fact find, which must be undertaken to ensure the client is getting best advice. Norwich Union said the higher rate covered advice and marketing costs, and pointed out that a direct sale would often entail five or six home visits.

However, neither company said it was their policy to tell customers that the interest rate charged would be lower if they went through the intermediary channel.

Sixty Plus comment: As it was I who raised this issue at the Roadshow, I strongly feel is yet another reason why customers should seek independent advice. The extra interest at 0.35% on £50,000 over 20 years would amount to around £5,500. Compared with our standard fee of £595, it is clear which route will save the client money. Are these providers ‘treating customers fairly’?