Topic 1 Flashcards
Give a simple definition of equity release
Equity release allows older homeowners (typically over the age of 55) to release money from their property while remaining in their home and without having to make monthly repayments.
State the two main types of equity release product available in the market today
Lifetime mortgages and home reversion plans.
Name the two market participants who are not regulated by the FCA
Solicitors (conveyancers) and surveyors.
Outline the three qualifying termination events as defined by the FCA
The person becoming a resident of care home: the person dying: the end of a specified period of at least 20 years from the date the seller entered into the arrangement.
For how long must advice records relating to equity release transactions be kept?
The firm must keep records of the customer’s information and why the recommendation was suitable for minimum of three years from when the recommendation was made.
Explain the difference between a real-time and Non-real-time financial promotion
A real-time promotion is one where the contact is through a telephone or face-to-face conversation; a non-real-time promotion is any other type of promotion - emails, letters, adverts and so on.
How does the FCA describe a vulnerable customer
The FCA describes a vulnerable customer as someone who is especially susceptible to detriment as a result of their personal circumstances, particularly when a firm is not providing appropriate levels of care.
State five ways in which a firm can help a vulnerable customer
- Arrange phone calls and meetings at a time to suit the customer.
- Conduct several short calls or meetings rather than one or two long ones.
- Making customers aware of lasting power of attorney.
- Be aware of customer’s communication preferences.
- Make customer aware of other available support.
Can you recall the two main types of equity release products and the key difference between the two?
The two main types of equity release products are lifetime mortgages and home reversion plans. The key difference is that with a lifetime mortgage, the borrower retains ownership of their home. With home reversion, the homeowner sells their property and becomes a tenant.
Can you recall the four regulated equity release market participants?
The four regulated equity release market participants are providers, arrangers, administrators and advisers.
Why are equity release customers deemed to be particularly vulnerable?
Equity release customers are seen as being vulnerable due to their medical conditions, age related cognitive difficulties, or their personal circumstances, such as debt problems or bereavement.
