Intro Into Equity Release

Question 1

Give a simple definition of Equity Release

Answer 1

Equity Release allows homeowners over the age of 55 to release money from their home, while remaining in their home and without having to make monthly payments.

Question 2

State the two main types of Equity release product available in the market today.

Answer 2

1) lifetime mortgages
2) home reversion plans

Question 3

Name the two market participants who are NOT regulated by the FCA

Answer 3

1) Solicitors (conveyancers)
2) Surveyors

Question 4

Outline the three qualifying termination events as defined by the FCA

Answer 4

1) the person dying
2) the person becoming resident of a care home
3) at the end of a specified period of at least 20 years from the date the seller entered into the arrangement

Question 5

How long must advice records relating to equity release be kept for?

Answer 5

A minimum of three years from when the recommendation was made

Question 6

Explain the difference between real time and non real time financial promotion

Answer 6

A real time promotion is where the contact is made through telephone or face-to-face conversation; a non-real time promotion is other type of promotion such as email, letters adverts and so on

Question 7

How does the FCA describe a vulnerable customer?

Answer 7

A vulnerable customer as someone who, due to personal circumstances, is especially susceptible to detriment particularly when a firm is not acting with appropriate levels of care

Question 8

State five ways in which a firm can help a vulnerable customer

Answer 8

1) arrange phone calls and meetings at a time to suit a customer

2) conduct several short calls or meetings rather than one or two long ones

3) make customers aware of lasting powers of attorney

4) be aware of customers communication preferences

5) be sensitive to timings

6) make customers aware of other available support

Question 9

Can you recall the two main types of equity release products and the key differences between the two?

Answer 9

1) Lifetime mortgages the borrower retains ownership

2) Home reversion plan the borrower sell some or all of their home and becomes a tenant

Question 10

Can you recall the four regulated equity release market participants?

Answer 10

1) Providers
2) arranges,
3) administrators,
4) and advisers

Question 11

Why are equity release customers deemed to be particularly vulnerable?

Answer 11

Equity release customers are seen as being potentially vulnerable due to the possibility of medical conditions, age related cognitive difficulties or their personal circumstances such as debt problems or bereavement