Half of equity release advisers don’t fully understand mortgage market review changes
New research from retirement specialist LV= reveals that under half (48%) of equity release advisers aren’t fully aware of the Mortgage Market Review (MMR) changes that come into effect, from 26 April 2014, and fewer than one in ten (8%) do not understand what they mean at all.
The Mortgage Market Review was a comprehensive review of the mortgage market carried out to reform the industry to ensure sustainability and better outcomes for consumers. One of the most significant changes for advisers and providers operating within the equity release arena is the fact that they are now responsible for assessing whether a client can afford to service a lifetime mortgage.
Under the new rules execution-only sales will be barred for certain types of borrowers, including those who take out an equity release product. There will also be a ban on equity release being sold on a non-advised basis, a market that LV= does not operate in.
The research, carried out by LV= amongst equity release advisers, reveals that the majority (96%) know that changes are due to be implemented. However, three-quarters of mortgage advisers (72%) feel that there is not enough guidance available on what the MMR means for equity release advisers.
Of those advisers who are fully aware of what the new rules means for them and their business, it is clear that industry opinion is split as to whether it is a step in the right direction. Indeed, whilst half expect the MMR to have a positive impact on their business, a third believe they will be negatively impacted.
Those advisers that are positive about the changes believe that the MMR will provide “clarity of regulatory obligations”, will “create a level playing field” and will result in “more clients seeking advice” before taking out a lifetime mortgage.
Vanessa Owen, LV= head of equity release and annuities said: “These changes will have a significant impact on how advisers operate and, given that the new rules come into force in just over ten weeks, it’s concerning that so few equity release advisers fully comprehend how they will affect them.
“We believe that the MMR rules will help to further safeguard clients who decide to take out an equity release product which can only be a good thing. We will be contacting advisers to help them prepare for the forthcoming changes.”
For further details on the LV= range of retirement products, including equity release and annuities go to www.lv.com
