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ER1 Overview

ER1 Overview. Agenda. High-level review of syllabus Areas we will concentrate on today Practise questions Conclusion. The syllabus. Chapter 1 - Introduction to equity release (what it is, lifetime mortgages vs home reversion plans) Chapter 2 - Regulation of lifetime mortgages

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ER1 Overview

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  1. ER1 Overview

  2. Agenda High-level review of syllabus Areas we will concentrate on today Practise questions Conclusion

  3. The syllabus Chapter 1 - Introduction to equity release (what it is, lifetime mortgages vs home reversion plans) Chapter 2 - Regulation of lifetime mortgages Chapter 3 - Regulation of home reversion plans Chapter 4 - Product providers and customers (lenders, customer types and consideration, eligibility

  4. The syllabus Chapter 5 - Equity release products (in detail) Chapter 6 - The application process (obtaining advice, making an application) Chapter 7 - Taxation and state benefits Chapter 8 – Giving advice (role of an adviser, sales cycle, fact find, recommendations)

  5. The syllabus Chapter 9 - Equity release administration Chapter 10 – Complaints and Compensation Sounds like a lot to do, but much of it is common sense If you are already a financial adviser or mortgage adviser, you will be familiar with some of this already So don’t panic!!

  6. Regulation of equity release products Lifetime mortgages and home reversion plans are now regulated by the FSA’s Mortgages and Home Finance: Conduct of Business Rules (MCOB) Home reversion plans became regulated on 06/04/07 Whilst the FSA handbook sets out 11 over-arching principles applying to all regulated firms, the MCOB rules provide the ‘smallprint’ for equity release products FSA’s definition of lifetime mortgages: all mortgage-based, open-ended products targeted at elderly borrowers.

  7. Regulation of equity release products MCOB regulations apply to lenders, advisers, arrangers and administrators. Two key sections of the MCOB regulations:- Advising & Selling Standards Initial Disclosure Document (IDD) Suitability Record-keeping Product Disclosure Requirements Pre-application – KFI Offer stage Start of contract Post sale

  8. Key Facts Illustration (KFI)

  9. Key Facts Illustration (KFI) – Section 7

  10. Key Facts Illustration (KFI) – Section 8

  11. Key Facts Illustration (KFI) – Section 11

  12. Key Facts Illustration (KFI) – Section 13

  13. Equity release product types 2 needs addressed by equity release products : need for capital need for income Many of today’s lifetime mortgage products can provide a combination of both, giving customers flexibility (within limits!!)

  14. Equity release product types Historically 4 main groups of products:- Lifetime Mortgages (lump sum or drawdown schemes) Home Income Plans (no longer available) Shared Appreciation Mortgages (SAMs) (no longer available) Home Reversion Plans

  15. The application process 1. Application form 2. Identity verification 3. Credit check 4. Land Registry check 5. Property valuation 6. Accept/decline? • Lifetime Mortgage Plan • Legal conveyance property • Mortgage Ts & Cs • Home Reversion • Sale of all/part of property • Creation of lease

  16. Equity release administration Annual statements MCOB requirement Issued by lender Tariff of charges Usually included with annual statement Insurance Annual evidence required Condition of property Rights and obligations Other occupiers Notification Impact on loan

  17. Equity release administration Additional borrowing lifetime mortgage vs home reversion Leaving the property moving house moving into care Death A will is essential Lifetime mortgage vs home reversion

  18. And now for some test questions!! We have picked a small sample of test questions Answer in small groups (15 mins to answer 10 questions) We will then discuss the answers together Good luck!

  19. Any questions?

  20. The boring bits! Feedback forms CPD certificates Event packs

  21. About LV= For financial adviser use only. Not to be used after 31 July 2012 LV Equity Release Limited, Keynes House, Tilehouse Street, Hitchin, Herts, SG5 2DX. LV= is a registered trade mark of Liverpool Victoria Friendly Society Limited and a trading style of the Liverpool Victoria group of Companies. LV Equity Release Limited is registered in England (No 1951289) and is authorised and regulated by the Financial Services Authority (register number 306287). Registered address: County Gates, Bournemouth, BH1 2NF. Tel: 01202 292333. 21224199 02/12

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