A 'Reasons Why' or 'Suitability Report' should be used to detail the advice which you have given the client. Firms will need to:
- establish a client's financial situation, investment objectives and knowledge and experience, in order to provide a suitable recommendation (FSA guidance)
- ascertain a client’s health and life expectancy, whether they plan to move home in the future and their preferences for their estate when recommending an equity release product to them
- continue to explain to customers in writing, in a tone and language that is easy to understand, the reasons why the firm has recommended one of Just Retirement’s equity release products to them (FSA guidance)
- explain to the the client the overall cost of the equity release plan they have recommended, its tax implications, APR%, timescales for release, initial outlay (including fees for advice and potential redemption penalties) and what happens in the event of early repayment/cessation
- find out if building insurance needs to be maintained (the required level if applicable) and if additional borrowing is available
The released cash or facility:
- should not exceed the current requirement – based what will be required in the next 5 years. Use of drawdown plans can negate the need to release any more money than is needed immediately.
- needs to be appropriate to the customer's attitude towards debt consolidation.
- should not include an unrealistic amount for any emergency fund
Useful links Free downloads from SHIP including 'Do's and Dont's' and 'Questions to Consider Factsheets (Pdf)