Finance

Background / Overview

October 2004 saw the introduction of new rules, under the mortgage regulatory regime of the Financial Services Authority (FSA), applied to lifetime mortgages.

The rules required those selling lifetime mortgages to consider:

• whether someone will be worse off in terms of tax and benefits, if they take out an equity release loan
• alternative methods of raising funds such as local authority grants and advise them appropriately.

Tax and benefits for older people can be complex and apply in a significant number of cases. There are various types of lifetime mortgage. The technical complexities they create can present financial advisers with a bewildering series of factors to be considered.

"...a regulated lifetime mortgage contract will be suitable if the firm has reasonable grounds to conclude that: the benefits to the customer outweigh any adverse effect on the customer's entitlement to means tested benefits tax position and alternative methods of raising the required funds..."

The solution

Ferret Information Systems, Europe's leading specialist in the provision of benefits advice systems in partnership with the Council of Mortgage Lenders (CML), have developed software, FINTAL, supported by training and materials, for lenders and intermediaries to use to assess the impact of different schemes on an individual's tax and benefits.

FINTAL is an holistic benefits and lifetime mortgage calculation and advice system, produced in consultation with equity release industry experts, backed by the CML and specifically designed for use by those providing lifetime mortgage advice to clients.

FINTAL dialogue screen

Benefits

• Enables accurate, on the spot calculation and advice, saving delays in decision making process
• Helps to build trust between adviser and client
• Provides an audit trail for compliance
• Clear and comprehensive graphical representations to demonstrate "what if" situations, projections, and the relationship between Income and Capital
• Structured dialogue ensures capture of all relevant information
• Context sensitive help and information system for support
• Kept up to date and accurate by an updating service as part of the annual contract
• Deployable on desktop PC's, laptop's, and networks
• Package includes training
• Supported by telephone Helpline which includes benefits advice as well as technical issues
• Backed by CML

The Integrated Solution for Financial Advisers

FINTAL is structured around an intelligent, easy-to-use dialogue, enhanced by context sensitive help and information. The dialogue ensures all relevant data is collected, skipping questions unnecessary for that client, and enables assessments to be made by those who are not specialists in welfare benefits.

FINTAL adopts an holistic approach which ensures a client's benefit income is maximised. Various scenarios can quickly and easily explored with the client on the spot. This enables the adviser to provide the best produce advice, building trust and minimising delays in the decision making process.

FINTAL can produce an "on screen" graphical representation clearly displaying capital, gross and net income, elements of income, and the effect of income and capital rules and entitlement to benefits and pension credits. The detail and clarity of this information can illustrate the start and finish points of access to benefits and assist the adviser in formulating recommendations.

FINTAL results screen

FINTAL can save cases for review over the period of the mortgage pre-sales engagement, allowing a review of information already considered and printed copy can be provided for the client to support recommendations. Information can easily be extracted from program output for inclusion in correspondence. After the sale is concluded saved cases and hard copy can serve as long term evidence of financial adviser compliance with the legislation.

FINTAL comes with a package including a day of training covering an overview of benefits and grants, the use of the software and the interpretation of results.

FINTAL is backed by the renowned Ferret helpline service that is not just there for system support, but also to answer queries around the administration and basis of benefits and the law behind them. Ferret's constant monitoring of the law and precedent ensures that, at a time of change, the system will always be accurate and up to date.

FINTAL graphical representation.
X axis is capital / income; Y axis is rising level of capital

FINTAL has been produced in consultation with equity release and lifetime mortgage experts. It is backed by the Council of Mortgage Lenders and assists in conformance with their good practice notes.

FINTAL meets all the requirements of the FSA legislation. It ensures the clients benefit income is maximised, enables the financial adviser to present the client with options for consideration, and can provide long term evidence that all the relevant factors were considered and the best possible advice was given to the client at the time.