The Financial Services Skills Council (Fssc) has launched a consultation on its draft examination standards for home reversion plans.
The development follows the Financial Services Authority’s (FSA) recent consultation on the regulation of home reversions and home purchase plans.
The draft standards state advisers should demonstrate knowledge of a home reversion plan and alternative methods of equity release/capital raising.
They must also demonstrate an understanding of:
- The principles of equity release, the types of equity release schemes available and the circumstances in which such schemes might be appropriate;
- The types of consumer at whom equity release is targeted and their personal requirements, wants and needs;
- The circumstances in which equity release may be appropriate and how these are influenced by consumers’ preferences and financial needs;
- The impact on consumers’ future options; and
- The key features, relative advantages and disadvantages of home reversion plans and the principal products and services available to home reversion plans.
Advisers must be able to demonstrate an ability to assess the relative levels of risk for different consumers taking account of their individual circumstances, an ability to analyse different types of home reversion plans, and an ability to apply rules relating to relevant state benefits.
Teresa Sayers, chief executive of the Fssc, says: “Equity release is one area of business that has come under increased scrutiny. Whilst lifetime mortgages are currently regulated and subject to an appropriate examination requirement, to date home reversions are not. The development of a standard for home reversions should level the playing field and provide consumers with piece of mind.”
The consultation will remain open until Friday 7 October. Depending on the outcome of the FSA’s consultation, the Fssc proposes to publish the standards in November.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
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