Regulatory Requirements for Equity Release Advisers

Finding an independent financial adviser seems to be an easy task with the numerous providers offering these services. The financial advisers authorised and regulated by the Financial Services Authority (FSA) must follow a certain procedure. Make sure the financial adviser you choose adheres to the key regulatory requirements set by FSA.

The independent financial advisers must provide an initial disclosure document when they meet you for the first time. Combining equity release advice with standard mortgage advice is not acceptable. Also, make sure the fees are detailed out in this document.

The advisers must collect every detail about your financial situation and assess these details to support the recommendation they make for you. They must also explain the reasons behind their recommendations.

They must ensure that releasing equity from your home is the right way of arranging the money you need. They must provide an overview of all types of equity release schemes available and help you make the appropriate choice.

The advisers must provide a detailed guide about the advantages and risks associated with equity release. These schemes may affect your means-tested benefits and your tax position. They should recommend this solution only if the positives outweigh the negatives.

The financial advisers must look for alternative financial solutions before they recommend equity release. For examples, if you need the money for house repairs, they may advise you to contact the local authority for a grant.

They should also check other solutions if your objective is debt consolidation. Sometimes, getting an increase in the repayment period or getting security on an unsecured loan may be more appropriate than equity release.

They must help you assess whether monthly payments will be possible. If your financial situation permits this, they may recommend a scheme that lets you pay the monthly interest, which limits the amount you owe.

They need to consider the future plans you have. If you plan to move, or if your health makes it necessary to move, in the future, the advisers must recommend plans for equity release that provide this opportunity.

The financial advisers need to focus on your age, health and life expectancy before they make any recommendations. They will need these details to use the equity release calculator to find out the amount you may release from your home.

They must consult you about your preferences regarding your estate before recommending a product. With their expertise, they will be able to find out schemes that provide you the opportunity to leave behind an inheritance.

The advisers must take into account the rights the home reversion scheme provides for the homeowners before they recommend it to you. Along with this, they must also assess whether it corresponds to your objectives, requirements and circumstances.

Equity release provides an opportunity for retired individuals to utilise the value locked up in their homes for a comfortable and secured life. However, it has a number of financial risks associated with it. When you get advice and guidance from a competent financial adviser, you will be able to make an informed decision in this regard.