The Equity Release Council has published a ‘best practice’ guide for advisers to ensure consumers receive a quality service and that case files capture sufficient details.
It follows a review of the council’s rules and guidance to confirm their accordance with the regulator’s position, and comes after the council recently expanded its checklist for advisers.
The guide supports advisers to gather soft facts and record customers’ use of language to show why the advice and any product recommendation was suitable for the individual circumstances.
Advisers are also encouraged to “respectfully and robustly” challenge client motivations to identify a solution that best fits their short-, medium- and long-term needs.
Chris Pond, chairman of the standards board at the ERC, said: “As a standards-setter with almost three decades of experience, the council continuously reviews and evolves its guidance for members to promote the highest standard of consumer protection.
“This new best practice guide will be a valuable resource for new and experienced advisers as they seek to provide personalised advice to consumers and document their conversations.”
Mr Pond added: “Our standards are based on extensive consultations with members and input from external parties, including the regulator. We support the FCA’s efforts to ensure all customers receive suitable advice on their options in later life.
“Our checklist for advisers and best practice guide help to ensure a wide range of factors are explored in depth to identify the most appropriate way forwards to meet each customer’s long-term needs.”
In June the Financial Conduct Authority warned that firms must do more to ensure they always give appropriate equity release advice after a multi-firm review.
Its concerns centred around the personalisation of advice, challenging customer assumptions and evidence of the suitability of advice - all of which were found to be lacking.
In its review of case files the FCA said it found a number that contained “standard generic text” to justify why customers did not want to consider alternatives to equity release.
The regulator encouraged firms to ensure the customer’s voice can “clearly be ‘heard’ in the file”.
It said that files should contain notes of the customer’s “own words, phrases and explanations… and not just responses recorded in the form of tick boxes or selected from a list of options”.
Sara McLeish, chief executive of Legal & General Financial Advice, said: “The best practice guide, alongside the recent ERC checklist, is a vital resource for advisers, helping them to provide high-quality and consistent advice to all consumers, which is in line with regulatory requirements and the Council’s additional standards.
“It is vitally important that the industry continually strives for consistent, accurate and robust advice so that all customers, particularly those who are vulnerable, understand the implications of borrowing in later life.”
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