Equity release firms urge advisers to take action on Duty
The Equity Release Council, the trade body for equity release providers, has urged advisers to check their responsibilities under the next phase of the FCA’s Consumer Duty which takes effect from 31 July.
From July legacy financial products, including equity release, will be covered by the Consumer Duty in the same way as new products - which were covered from July last year.
The council says the ‘closed book’ extension of the duty means consumers with products that are no longer sold or renewed must come under the “same scrutiny” as those on current products.
The Equity Release Council says the next stage of the Consumer Duty is being considered as “even tougher” to implement than phase one because closed books of mortgages can be decades old and are often sold on without the full client history.
The Council recently published a guide for its members on the new responsibilities and has also made available webinars and technical bulletins.
Kelly Melville-Kelly, the council’s director of risk, policy and compliance, said that while providers shoulder the most responsibility, advisers have a key role to play too.
She said: “The consumer duty is about fairness. Firms must act in the best interests of their customers and take reasonable care to avoid causing harm, at all times.”
“Embracing this proactive approach during the open book phase has meant that organisations have had to update and change their processes, but our members have risen to the challenge. Applying the same scrutiny to closed book customers is going to be harder still.”
She said some firms with inherited closed books may have a bigger challenge than many if the originator firms are no longer in the market.
She added: “For providers, termed manufacturers in the duty, this could mean unpicking legacy systems that have long since been archived. For advisers, or distributors, it’s about working with the providers as well as checking client records to see if any are on closed book products and ensuring they are kept informed of their options.
“They also need to ensure that if a client’s circumstances have changed, there is an assessment of the ongoing suitability of the product, with particular attention paid to vulnerable customers.”
The Equity Release Council has more than 750 member firms and 1,800 individuals registered, including providers, funders, regulated financial advisers, solicitors, surveyors and other professionals. Since 1991, it estimates that more than 650,000 homeowners have accessed £46bn of property wealth via council members.