Key Partnerships has warned that advisers completing small numbers of equity release cases a year could face potential compliance risks from being unaware of market innovation including enhanced loan-to-values for those with medical or lifestyle conditions.
Analysis by the referral service for advisers shows nearly 700 smaller firms completed just one case last year with around 1,500 firms completing less than one a month in 2014. They could potentially face regulatory issues – the Financial Conduct Authority has warned against ‘dabbling’ after conducting a review of the equity release market and urged firms to outsource to a specialist if possible.
The strong growth in equity release – Equity Release Council figures for the first quarter showed an all-time high of £325 million following nearly £1.4 billion in 2014 – saw almost 2,000 adviser firms complete sales last year.
That number is forecast to grow further this year as pension freedoms highlight the benefits of accessing property wealth and Key Partnerships believes advisers need support in order to ensure they can maximise opportunities for clients.
Will Hale, director at Key Partnerships, said: “Advisers need to be aware of the potential regulatory pitfalls of only occasionally offering equity release as a solution. This could mean they are not whole of market and run the risk of unintentionally not offering clients the best service.
“A great deal has changed in the equity release market in recent years, with new products and rates that may not be revealed using traditional mortgage sourcing systems. The Regulator has recommended advisers outsource this type of business to specialists rather than dabble and Key Partnerships provides a potential solution. “Advisers can refer their clients to us, who will then receive advice from the UK’s leading equity release broker – taking all of the regulatory and compliance worries away, while retaining a client relationship.”
“The growth in equity release sales in the past three months is fantastic news and we anticipate 2015 being another record year. This is good news for advisers and their clients looking to secure a more comfortable retirement.”
