Level 3 Certificate in Regulated Equity Release (CeRER ) Qualification Specification Page 1 of 38
CONTENTS Page 1. Accreditation information 3 2. Aims of the CeRER 4 3. Learning outcomes for CeRER 5 4. Objectives of CeRER 6 5. Structure of the CeRER 7 6. Entry requirements 7 7. Methods of study 7 8. Assessment methodology of the CeRER 7 9. Grading 7 10. Assessment resits 8 11. Learning resources 8 12. Unit 1 specification 8 Unit 1 learning outcomes / assessment criteria 9 Unit 1 assessment methodology 11 13. Unit 2 specification 11 Unit 2 learning outcomes / assessment criteria 12 Unit 2 assessment methodology 14 14 Unit 3 specification 16 Unit 3 learning outcomes / assessment criteria 17 Unit 3 assessment methodology 18 15 Unit 4 specification 18 Unit 4 learning outcomes / assessment criteria 19 Unit 4 assessment methodology 20 16 Unit 5 specification 21 Unit 5 learning outcomes / assessment criteria 22 Unit 5 assessment methodology 23 17 Unit 6 specification 23 Unit 6 learning outcomes / assessment criteria 24 Unit 6 assessment methodology 26 18 Unit 7 specification 26 Unit 7 learning outcomes / assessment criteria 26 Unit 7 assessment methodology 27 Page 2 of 38
19 Unit 8 specification 28 Unit 8 learning outcomes / assessment criteria 28 Unit 8 assessment methodology 33 20 Unit 9 specification 34 Unit 9 learning outcomes / assessment criteria 34 Unit 9 assessment methodology 37 Page 3 of 38
1. Accreditation information Qualification title ifs Level 3 Certificate in Regulated Equity Release (CeRER ) Ofqual qualification number 501 / 0630 / 2 Qualification level 3 European Qualifications Framework (EQF) level 4 Regulation start date 1 September 2010 Operational start date 1 September 2010 Offered in Assessment available in English Assessment available in Welsh Assessment available in Irish Sector subject area Purpose Sub-purpose England, Wales and Northern Ireland Yes No No 15.1 Accounting and Finance D. Confirm occupational competence and/or 'licence to practice' D2. Confirm the ability to meet a 'licence to practice' or other legal requirements made by the relevant sector, professional or industry body Total credits 32 Minimum credits at / above level 32 Minimum guided learning hours 320 Maximum guided learning hours 320 Overall grading type Assessment methods Qualification description Pass Multiple-choice examination The Certificate in Regulated Equity Release consists of nine mandatory units. A total credit value of 32 must be obtained for achievement of the qualification. Age ranges 16 18; 19+ 1.1 Table 1 QCF Level 3 level descriptors DESCRIPTION SUMMARY Achievement at Level 3 reflects the ability to identify and use relevant understanding, methods and skills to complete tasks and address problems that, while well defined, have a measure of complexity. It includes taking responsibility for initiating and completing tasks and Page 4 of 38
DESCRIPTION procedures as well as exercising autonomy and judgement within limited parameters. It also reflects awareness of different perspectives or approaches within an area of study or work. KNOWLEDGE AND UNDERSTANDING APPLICATION AND ACTION AUTONOMY AND ACCOUNTABILITY Use factual, procedural and theoretical understanding to complete tasks and address problems that, while well defined, may be complex and non-routine. Interpret and evaluate relevant information and ideas. Be aware of the nature of the area of study or work. Have awareness of different perspectives or approaches within the area of study or work. Address problems that, while well defined, may be complex and nonroutine. Identify, select and use appropriate skills, methods and procedures. Use appropriate investigation to inform actions. Review how effective methods and actions have been. Take responsibility for initiating and completing tasks and procedures, including, where relevant, responsibility for supervising or guiding others. Exercise autonomy and judgement within limited parameters. 2. Aims of the CeRER 2.1 The aims of the CeRER are to: i. provide a licence to practice for advisers in mortgages and equity release; ii. provide students with a challenging qualification covering the core disciplines of mortgage advice and equity release; iii. enable students to examine issues relating to mortgage and equity release advice; iv. enable students to apply specialised, current knowledge of the mortgage and equity release market; v. provide students with the tools and terminology necessary to analyse the mortgage and equity release market and provide appropriate solutions for consumers; vi. provide students with the opportunity to evaluate the impact of the changing regulatory environment on issues relating to the mortgage and equity release market and mortgage and equity release advice; vii. support students understanding of ethical issues as applicable to mortgage and equity release advice; viii. familiarise students with the links between theory and practice; ix. enable students to explore recent developments in financial services products; x. enhance students ability to become autonomous and self-directed and enable them to manage their own professional development; and xi. provide opportunities for students to develop the necessary skills and competencies to move on to further study or employment. Page 5 of 38
3. Learning outcomes for the CeRER 3.1 Knowledge and understanding elements of the CeRER will provide students with the ability to critically analyse: i. the environment of the mortgage and equity release market with a focus on the range of equity release products which meet their clients needs and aspirations; ii. how a variety of financial services products and concepts may be applied to their clients requirements; iii. the current technical language, tools, methods and practices of mortgage advice to enable effective financial decision-making; and iv. the equity release market and its need to respond to the constantly changing economic, legal and regulatory environment. 3.2 Subject-specific practical / professional elements of the CeRER will provide students with the skills to: i. use appropriate tools (software and IT eg Excel) and methods to conduct meaningful research from the information from clients and financial sources; ii. analyse client information, products and services and reflect upon their suitability and effectiveness; and iii. understand how financial products respond to the drivers and implications of changes in the wider environment and how these changes affect their clients financial decisionmaking. 3.3 Intellectual skills developed by the CeRER will provide students with the ability to: i. locate, extract and analyse data from different financial sources; ii. apply higher-level cognitive skills of reflective practice, including analysis, and evaluation; iii. demonstrate numeracy skills, including the ability to manipulate financial and other numerical data; iv. utilise problem-solving and decision-making skills; and v. critically evaluate data and information. 3.4 Transferable skills and personal qualities developed by the CeRER will provide students with the ability to: i. use appropriate data and information from a range of sources; ii. learn independently and enhance skills of self-reflection and self-managed study; iii. structure and communicate ideas logically and coherently; and iv. use appropriate communication and information technology skills. Page 6 of 38
4. Objectives of the CeRER 4.1 On completion of the CeRER qualification, students will be able to: i. understand the purpose and structure of the UK financial services industry; ii. understand the main financial asset classes and product types; iii. understand the main financial advice areas and the process of giving financial advice; iv. understand the UK taxation and social security system; v. identify the main aims and activities of the Financial Services Authority (FSA); vi. identify how other non-tax laws and regulations impact upon firms and the process of advising clients; vii. identify the different types of mortgages and equity release; viii. outline the house-buying process and the common types of borrower; ix. understand the Mortgage Conduct of Business Rules and the legislation affecting mortgages; x. understand the economic and regulatory context for giving mortgage and equity release advice; xi. understand the role of the mortgage and equity release adviser; xii. understand the factors affecting the value of a property; xiii. understand the different forms of valuation; xiv. understand the fees and charges involved in arranging a mortgage or equity release product; xv. understand the key features of the different types of mortgage, equity release product and repayment vehicle; xvi. understand the main features and functions of different types of protection; xvii. understand the principles, procedures and costs associated with raising additional money; xviii. understand the implications for the borrower of the non-payment of the mortgage and the legal rights remedies available; xix. understand the main provisions made by the State in relation to mortgages and equity release ; and xx. understand the principles and types of equity release schemes available and the types of people they are appropriate for. 4.2 As well as developing knowledge, the CeRER assists in developing the ability to: i. analyse clients circumstances and provide suitable mortgage and equity release solutions; ii. apply suitable solutions to specific clients circumstances; iii. assess the levels of risk for different equity release consumers; iv. analyse and evaluate data and information; v. develop core personal skills including communication (spelling, punctuation and grammar), numeracy and IT; Page 7 of 38
vi. formulate appropriate responses to resolve defined problems; vii. develop skills in examination technique; and viii. apply and build on previous learning and experience. 4.3 CeRER also forms part of the Apprentice Framework for Providing Financial Advice. 4.5 ifs University College is a leading provider of qualifications recognised by the Financial Conduct Authority as being appropriate for certain regulated functions. However it is the responsibility of individual students to be aware of and adhere to any additional regulatory requirements associated with these roles as set out in the FCA Handbook. Please refer to the Financial Conduct Authority for further information. 5. Structure of the CeRER 5.1 CeRER is made up of nine mandatory units which need to be successfully completed in order for the student to achieve the certificate: i. Unit 1: Introduction to Financial Services Environment and Products (5 credits / 50 GLH) ii. Unit 2: UK Financial Services and Regulation (3 credits / 30 GLH) iii. Unit 3: Mortgage Law, Policy, Practice and Markets (2 credits / 20 GLH) iv. Unit 4: Mortgage Applications (2 credits / 20 GLH) v. Unit 5: Mortgage Payment Methods and Products (2 credits / 20 GLH) vi. Unit 6: Mortgage Arrears and Post-Completions Issues (2 credits / 20 GLH) vii. Unit 7: Assessment of Mortgage Advice Knowledge (4 credits / 40 GLH) viii. Unit 8: Fundamentals of Equity Release (6 credits / 60 GLH) ix. Unit 9: Equity Release Solutions (6 credits / 60 GLH) 6. Entry requirements 6.1 There are no specified entry requirements. However, individuals need to be satisfied of their ability to study in English at Level 3. 6.2 CeRER is equivalent to a GCE AS level qualification. 7. Methods of study 7.1 CeRER is a distance learning qualification. 7.2 Materials and additional information are available by access to my ifslearning. 8. Assessment methodology of the CeRER 8.1 All units will be assessed using multiple choice questions (MCQs) made up of the following components: Page 8 of 38
i. Units 1, 2 and 8: 50 standalone MCQs; ii. Units 3, 4, 5 and 6: 25 standalone MCQs; iii. Unit 7: 6 case studies each with 10 linked MCQs; and iv. Unit 9: 3 case studies each with 10 linked MCQs. 8.2 A total of 340 marks are available from all units comprising 50 marks for each of units 1, 2 and 8; 25 marks for each of units 3, 4, 5 and 6; 60 marks for unit 7 and 30 for unit 9. 9. Grading 9.1 The overall qualification will be graded with pass/ fail only. 9.2 Unit related feedback Feedback is provided in students analysis sheets (available on www.myifslearning.com) for each unit in order for to see the relative strength of assessment performance. (see Table): Feedback on units: levels Unit-related feedback CeRER module 1 CeRER module 2 CeRER modules 3and 4 Pass 70% 68% 70% Pass (at merit level) 80% 80% 80% Pass (at distinction level) 90% 88% 90% 10. Assessment resits 10.1 There are no restrictions on the number of times a student can resit a unit they have failed. 11. Learning resources 11.1 Students will be provided with the following learning resources: i. hard copy versions of learning materials; ii. online access via my ifslearning to learning materials and to KnowledgeBank (virtual library); and iii. unit syllabuses; Page 9 of 38
11.2 In addition to the study texts supplied, students can purchase alternative learning support, provided in the form of: Specimen examination papers Revision notes An online support service A Competence Development Tool (CDT) 12.1 Unit 1 specification Unit title Unit 1: Introduction to Financial Services Environment and Products (ITFS) Ofqual unit reference number L / 501 / 8715 Unit level 3 Guided learning hours 50 Unit credit value 5 Unit aims i. This unit introduces students to the financial services industry by focusing on the structure of the UK financial services industry and the interaction between the types of financial services products and clients requirements. ii. Students will gain an understanding of the main asset classes and features of financial services products. iii. Students will gain an appreciation of the UK tax and benefits system. iv. Students will gain an appreciation of the main financial advice areas. Page 10 of 38
12.2 Unit 1 learning outcomes / assessment criteria Learning outcome (LO) 1. Understand the purpose and structure of the UK financial services industry. 2. Understand the main financial asset classes and their characteristics, covering past performance, risk and return. demonstrate that they can understand: U1.1 The function of the financial services industry in the economy transferring funds between individuals, businesses and government risk management U1.2 The main institutions/organisations markets, retail institutions, wholesale institutions, credit unions U1.3 The role of the EU and of the UK government regulation, taxation, economic and monetary policy, provision of welfare and benefits U1.4 The purpose and position of clearing and settlement organisations U2.1 Cash deposits and money market instruments U2.2 Government securities and corporate bonds fixed interest and index linked U2.3 Equities U2.4 Real estate residential and commercial U2.5 Commodities U2.6 Foreign exchange 3. Understand the main financial services product types and their functions. 4. The main financial advice areas. 5. The process of giving financial advice, including the importance of regular reviews of the consumer s U3.1 Direct investment cash, government securities and corporate bonds, equities and property, commercial money market instruments, enterprise investment schemes (EIS), venture capital trusts (VCT) U3.2 Collective investments structure, tax and charges OEICs/unit trusts, investment trusts, life assurance contracts, offshore funds U3.3 Derivatives their structure and purpose U3.4 Mortgages and other loans personal and commercial U3.5 Pensions U3.6 Structured products U3.7 Protection products life and general U4.1 Budgeting U4.2 Protection U4.3 Borrowing and debt U4.4 Investment and saving U4.5 Retirement planning U4.6 Estate planning U4.7 Tax planning U5.1 The nature of the client relationship, confidentiality, trust and consumer protection U5.2 The information required from consumers and methods of Page 11 of 38
Learning outcome (LO) circumstances. demonstrate that they can understand: obtaining it U5.3 Factors determining how to match solutions with consumer needs and demands U5.4 How to assess affordability and suitability U5.5 The importance of communication skills in giving advice and how to adapt advice to customers with different capacities and needs U5.6 The importance of monitoring and review of consumers circumstances U5.7 Information for consumers and when it should be provided (outline only) 6. The basic legal concepts relevant in financial advice. 7. The UK taxation and social security systems and how they affect personal financial circumstances. 8. The impact of inflation, interest rate volatility and other relevant U6.1 Legal persons individuals, wills, intestacy, personal representatives (and administration of estates), trustees, companies, limited liabilities, partnerships U6.2 Contract, capacity to contract U6.3 Agency U6.4 Real estate, personal property and joint ownership U6.5 Power of attorney, enduring power of attorney and lasting power of attorney U6.6 Insolvency and bankruptcy, Individual Voluntary Arrangements (IVAs), CVAs U7.1 Concept of residency/domicile U7.2 UK Income tax system liability to income tax, allowances, reliefs, rates, grossing up interest and dividends, employed and self-employed income, self-assessment deadlines, priorities for taxing different classes of income, gift aid, Give As You Earn U7.3 Capital gains tax liability to CGT, disposals, death, deductions, losses, main reliefs and exemptions, calculation of chargeable gains U7.4 Inheritance tax liability to IHT, main exemptions, calculation of IHT liabilities U7.5 Corporation tax U7.6 Stamp duty land tax and stamp duty reserve tax on securities U7.7 VAT and Insurance Premium Tax U7.8 Withholding tax U7.9 National insurance U7.10 State benefits U8.1 Definition of inflation, deflation, disinflation U8.2 The difference between fixed and variable interest rates Page 12 of 38
Learning outcome (LO) socio-economic factors on personal financial plans. demonstrate that they can understand: and their impact U8.3 The impact of socio-economic factors and how they affect the affordability, suitability and performance of financial products in both the long and short term 12.3 Unit 1 assessment methodology i. The assessment of Unit 1 has one component: a. 50 multiple-choice questions. This component of the examination is to be completed in one hour. This component of the examination is worth 50 marks. 13.1 Unit 2 specification Unit title Unit 2: Uk Financial Services and Regulation (UKFS) Ofqual unit reference number R / 501 / 8716 Unit level 3 Guided learning hours 30 Unit credit value 3 Unit aims i. This unit introduces student to the regulation of UK financial services. ii. Students will gain an understanding of the requirements of the regulator and other laws relating to the provision of advice. iii. Students will understand the features of the regulator s Conduct of Business Rules and how they apply to clients. iv. Students will gain an appreciation of Ant-Money Laundering regulations. v. Students will understand the rules relating to regulated complaints and compensation. vi. Students will gain an appreciation of the Data Protection Act. Page 13 of 38
13.2 Unit 2 learning outcomes / assessment criteria Learning outcome The learner when awarded credit for 1. Know the main aims and activities of the Financial Conduct Authority (FCA) and its approach to ethical conduct by firms and individuals. 2. Know how other non-tax laws and regulations are relevant to firms and to the process of advising clients. 3. Know the role of oversight groups. 4. Understand the FCA s approach to regulating firms and individuals. 5. Understand how the FCA s rules affect the control structures of firms and their relationship with the FCA. Assessment criteria demonstrate that they can: K1.1 Demonstrate a knowledge of the FCA s statutory objectives, roles, activities and powers K1.2 Demonstrate a knowledge of the FCA s principles for businesses and approved persons how they reflect the need for ethical behaviour by firms and approved persons, FCA guidance K1.3 Demonstrate a knowledge of the approach to, and requirements for, treating customers fairly K1.4 Demonstrate a knowledge of the arrangements, systems and controls for senior managers K1.5 Demonstrate a knowledge of the fit and proper test for approved persons K1.6 Demonstrate a knowledge of the prevention of financial crime K1.7 Demonstrate a knowledge of the role of the PRA and concept of dual regulated firms K1.8 Demonstrate a knowledge of the FCA s role in the regulation of consumer credit, competition and contract terms K2.1 Demonstrate a knowledge of the Equity Release Council K2.2 Demonstrate a knowledge of the Pensions Regulator K2.3 Demonstrate a knowledge of the Advertising Standards Authority; Lending Code K2.4 Demonstrate a knowledge of EU directives K3.1 Demonstrate a knowledge of the role of internal and external auditors, trustees and compliance function U1.1 Understand the authorisation of firms, regulated activities & regulated investments, firms status U1.2 Understand capital adequacy and liquidity U1.3 Understand FCA supervision and the risk based approach U1.4 Understand discipline and enforcement including notification requirements U1.5 Understand regulatory developments U2.1 Understand approved persons and controlled functions U2.2 Understand reporting and record keeping U2.3 Understand training and competence rules Page 14 of 38
Learning outcome The learner when awarded credit for 6. Understand how the FCA s Conduct of Business Rules apply to the process of advising clients/ customers. 7. Understand how the Anti- Money Laundering regulations apply to dealings with clients/customers. Assessment criteria demonstrate that they can: U3.1 Understand advertising and financial promotion rules U3.2 Understand the types of client U3.3 Understand the information about the firm's services, including client agreements U3.4 Understand the status of advisers and status disclosure to customers U3.5 Understand identifying client circumstances and needs U3.6 Understand suitability of advice U3.7 Understand execution only, non-advised sales and statements of demands and needs U3.8 Understand charges and commissions U3.9 Understand cooling off and cancellation U3.10 Understand product disclosure and risk disclosure statements U3.11 Understand simplified advice on the stakeholder suite of products U3.12 Understand regulatory rules for mortgage advice (MCOB) status disclosure, initial disclosure document, charges, suitability, product disclosure, cancellation U3.13 Understand regulatory rules for general insurance advice (ICOB) status disclosure, initial disclosure document, charges, suitability, product disclosure, cancellation U3.14 Understand the Banking Conduct of Business (BCOB) and Payment Services Directive U4.1 Understand the definition of financial crime and proceeds of crime U4.2 Understand money laundering regulations and offences, the Terrorism Act 2000, Proceeds of Crime Act 2002 U4.3 Understand client identification procedures U4.4 Understand record keeping requirements U4.5 Understand reporting procedures, U4.6 Understand training requirements U4.7 Understand enforcement U4.8 Understand the role of the Financial Action Task Force and the National Crime Agency (NCA) Page 15 of 38
Learning outcome The learner when awarded credit for Assessment criteria demonstrate that they can: U5.1 Understand consumer rights and remedies, including 8. Understand the main features of the rules for dealing with complaints and compensation. awareness of their limitations U5.2 Understand firms internal complaints procedures U5.3 Understand the Financial Ombudsman Service (FOS) U5.4 Understand the Financial Services Compensation Scheme (FSCS) U5.5 Understand the Pension Ombudsman 9. Understand how the Data Protection Act 1998 affects the provision of financial advice and the conduct of firms generally. U6.1 Understand the definitions in the Data Protection Act U6.2 Understand the data protection principles U6.3 Understand the enforcement of the Data Protection Act 13.3 Unit 2 assessment methodology i. The assessment of Unit 2 has one component: a. 50 multiple-choice questions. This component of the examination is to be completed in one hour. This component of the examination is worth 50 marks. 14.1 Unit 3 specification Unit title Unit 3: Mortgage Law, Policy Practice and Markets (MLPP) Ofqual unit reference number Y / 501 / 8717 Unit level 3 Guided learning hours 20 Unit credit value 2 Unit aims i. This unit introduces students to the regulation of the different types of mortgages and equity release products. ii. Students will gain an understanding of the housebuying process. iii. Students will gain an appreciation of the different types of borrower and their differing requirements. iv. Students will gain an appreciation of the Mortgage Conduct of Business Rules. Page 16 of 38
14.2 Unit 3 learning outcomes / assessment criteria Learning outcome (LO) 1. know the regulatory definition of different types of mortgages, second charges and equity release. 2. know the house-buying process, the key parties involved and their roles. 3. know the principal types of property defect that surveys can identify and understand their implications when seeking a mortgage, including the options available to consumers. 4. Know the process and implications of buying property at auction. 5. Know the common types of borrower and how their main mortgage related requirements may differ and what factors may disqualify people from borrowing. demonstrate that they can: K1.1 demonstrate a knowledge of regulatory definitions as given in the Handbook England/Wales K2.1a demonstrate a knowledge of the role of estate agent/valuer/conveyancer/legal adviser; K2.2a demonstrate a knowledge of the process to contract exchange/completion and when a contract becomes binding; OR Scotland K2.1b demonstrate a knowledge of the role of estate agent/valuer/legal adviser; K2.2b demonstrate a knowledge of a conditional/unconditional offer; K2.3b demonstrate a knowledge of private bargain/private treaty; K2.4 demonstrate a knowledge of acceptance/completion/conclusion of missives; K3.1 demonstrate a knowledge of main property defects; K3.2 demonstrate a knowledge of how property defects may affect the lending decision and/or require immediate remedial works. K4.1 demonstrate a knowledge of the requirement for funding (ie cash/mortgage commitment) to be in place up front; K4.2 demonstrate a knowledge of contracts exchanged, with associated deposit, on the day K4.3 demonstrate a knowledge of different methods of purchasing property via auction K5.1 demonstrate a knowledge of private/residential borrowers; K5.2 demonstrate a knowledge of intermediary/business/commercial borrowers (outline only); K5.3 demonstrate a knowledge of high net worth customers K5.4 demonstrate a knowledge of mortgage professionals Page 17 of 38
Learning outcome (LO) 6. understand the main requirements of the Mortgage Conduct of Business Rules and the legislation affecting mortgages. 7. Understand the economic and regulatory context for giving mortgage advice. demonstrate that they can: K5.5 demonstrate a knowledge of those who cannot borrow: undischarged bankrupts; impaired credit status; mentally incapacitated; minors U1.1 Understand National House-Building Council guarantees U1.2 Understand the Consumer Protection from Unfair Trading Regulations 2008 U1.3 Understand Contract Law U1.4 Understand the Principles of Agency U1.5 Understand Consumer credit law U1.6 Understand Legal obligations and guarantors U1.7 Understand Lenders Rights and Borrowers Covenant U1.8 Understand the Financial Services and Markets Act 2000 (including the Mortgage Conduct of Business Rules and Mortgage market Review) England/Wales/Northern Ireland: U1.9 Understand Property Law OR Scotland: U1.10 Understand policies, as determined by the Scottish Executive, affecting the mortgage process and property market in Scotland; U1.11 Understand the Matrimonial Homes Act (e.g. single Understand borrowers require an affidavit); U1.12 Understand the Tenancy Act; U1.13 Understand the Mortgage Rights Act; U1.14 Understand the Statutory Repair Act; U1.15 Understand the Bankruptcy Act (refers to 'sequestration' in Scotland); U1.16 Understand the Land Tenure Reform Act U1.17 Understand Feu disposition (reference Land Certificate in England/Wales); U1.18 Understand Court decree (reference County Court Judgment in England/Wales). U2.1 Understand the property market and the main conditions that affect it U2.2 Understand interest rates and their drivers U2.3 Understand the UK mortgage lending sector U2.4 Understand mortgage regulation: MCOB and its implications for the mortgage adviser Page 18 of 38
14.3 Unit 3 assessment methodology ii. The assessment of Unit 3 has one component: a. 25 multiple-choice questions. This component of the examination is to be completed in 30 minutes. This component of the examination is worth 25 marks. 15.1 Unit 4 specification Unit title Unit 4: Mortgage Applications (MAPP) Ofqual unit reference number D / 501 / 8718 Unit level 3 Guided learning hours 20 Unit credit value 2 Unit aims i. This unit introduces students to the mortgage application process and procedures. ii. Students will gain an understanding of the role of the mortgage adviser. iii. Students will gain an appreciation of the different types of fees and charges relating to mortgage application. iv. Students will gain an appreciation of the factors affecting the valuation of a property and the different types of valuation. Page 19 of 38
15.2 Unit 4 learning outcomes / assessment criteria Learning outcome (LO) 1. Understand the role of a Mortgage Adviser and the importance and principles of providing advice, including the key factors affecting the advice given 2. Understand the implications for consumers of 'gazumping' and 'gazundering' 3. Understand the purpose of additional security, including the role of guarantors. 4. Understand the fees and charges involved in arranging a mortgage, identify where these apply, the services they cover, when they become due, which are refundable and how the opportunity for refunds diminishes as the process nears completion. 5. Understand the principal factors affecting the value of property, including their implications for consumers seeking mortgages demonstrate that they can understand: U1.1 affordability; U1.2 suitability; U1.3 risk U1.4 term of mortgage U1.5 principles of ethical advice, including regulatory guidance (for example, Treating Customers Fairly) U1.6 methods of verifying information supplied by consumers (plausibility) U1.7 methods of checking that mortgage solutions match consumer immediate and long term needs and circumstances U2.1 gazumping U2.2 gazundering U3.1 the requirement for guarantors to be advised to seek independent legal advice U3.2 Higher lending charges and other types of security (life policies and collateral) U4.1 reservation fees; U4.2 application fees; U4.3 arrangement/booking fees; U4.4 lenders reference fees; U4.5 Land Registry fees; U4.6 valuation fees; U4.7 estate agent fees; U4.8 legal/solicitors fees; U4.9 Stamp Duty Land Tax/ Land and Buildings Transaction Tax; U4.10 Local Authority searches; U4.11 bankruptcy searches; U4.12 telegraphic transfer costs; U4.13 environmental searches, eg flooding, mining U4.14 Mortgage exit administration fees U4.15 survey fees EPCs and other specialist reports; U4.16 title indemnity fees; U4.17 higher lending charge U4.18 brokers fees U5.1 type of property; U5.2 location; U5.3 building materials and any restrictions; U5.4 age of property; Page 20 of 38
Learning outcome (LO) and when consumers should be referred for specialist advice 6. Understand the different forms of valuation and survey and which might be appropriate for different properties and/or the borrower's circumstances. 7. Understand the need to obtain Local Authority planning consent for house development/extensions. demonstrate that they can understand: U5.5 freehold/commonhold/leasehold (England & Wales); U5.6 multiple use; U5.7 vacant possession; U5.8 reinstatement value; U5.9 whether it is insurable; including but not limited to risk of flooding/subsidence/heave U5.10 planning permission; U5.11 building regulations; U5.12 contract guarantees; U5.13 listed/heritage; U5.14 easements, including but not limited to rights of way; U5.15 due diligence enquiries, including but not limited to outstanding disputes; U5.16 covenants. U6.1 forms of valuation and or survey (basic valuations, homebuyer's report, building survey); U6.2 requirements of lenders; U6.3 rights of the consumer U7.1 the legal basis of local authority planning procedures U7.2 the main procedures in obtaining local authority planning consent U7.3 development limitations that apply to different categories of listed buildings 15.3 Unit 4 assessment methodology iii. The assessment of Unit 4has one component: a. 25 multiple-choice questions. This component of the examination is to be completed in 30 minutes. This component of the examination is worth 25 marks. Page 21 of 38
16.1 Unit 5 specification Unit title Unit 5: Mortgage Payment Methods and Products (MPMP) Ofqual unit reference number H / 501 / 8719 Unit level 3 Guided learning hours 20 Unit credit value 2 Unit aims i. This unit introduces students to the different types of mortgage product. ii. Students will gain an understanding of the suitability of each type of mortgage for different clients. iii. Students will gain an appreciation of the different types repayment methods. iv. Students will gain an appreciation of the different forms of protection for a mortgage. Page 22 of 38
16.2 Unit 5 learning outcomes / assessment criteria Learning outcome (LO) 1. Understand the key features of the different types of mortgage repayment options and their benefits and drawbacks for different types of borrower. 2. Understand the key features of the common types of mortgage product and interest rate options. 3. Understand the structure and features of other types of mortgage. demonstrate that they can understand: U1.1 capital and interest repayment (repayment mortgages); U1.2 interest payment (interest only mortgages); U1.3 implications for the consumer of the under-performance of repayment options U1.4 Repayment vehicles used in conjunction with interest only mortgages endowment policies; pension arrangements; ISAs; OEICS; Unit Trusts, Investment Trusts U1.5 lender s requirement to assess performance of repayment vehicles U2.1 standard variable rate mortgages; U2.2 tracker mortgages (variable rate/libor/base rate tracker mortgages); U2.3 fixed rate mortgages; U2.4 capped rate (including capped and collared) mortgages; discounted rate (including cash back/gift) mortgages; low start mortgages; U2.5 flexible mortgages; U2.6 all in one/current account mortgages/offset mortgages, including drawdown facilities; U2.7 CAT marked mortgages; U2.8 hybrid arrangement products, for example 'part and part' mortgages U2.9 the performance and volatility of fixed and variable interest rates for different types of borrower U3.1 commercial mortgages; U3.2 equity release including home reversion plans; U3.3 low start mortgages; U3.4 self build mortgages; U3.5 foreign currency mortgages; U3.6 new build mortgages; U3.7 buy to let mortgages (including types of tenancy); U3.8 'right to buy' Council property mortgages; U3.9 shared appreciation mortgages; U3.10 shared ownership mortgages (Housing Association); U3.11 equity share mortgages; U3.12 Government incentives, including Help to buy schemes U3.13 adverse credit/sub-prime mortgages (for 'nonconforming' or 'non-status' borrowers, with, e.g. CCJs/arrears/discharged bankruptcy); Page 23 of 38
Learning outcome (LO) demonstrate that they can understand: U3.14 Sharia compliant mortgages (also known as Islamic mortgages 4. Understand the main features and functions of different forms of life assurance and other insurances (eg mortgage payment protection insurance (MPPI), life, accident and sickness insurance (ASU), building insurance, contents insurance) associated with arranging a mortgage. U4.1 life assurance; Pension term assurance U4.2 accident/sickness/critical illness/unemployment/ redundancy insurance U4.3 income protection insurance; U4.4 buildings and contents insurance; U4.5 waiver of premium benefit; 16.3 Unit 5 assessment methodology iv. The assessment of Unit 5 has one component: a. 25 multiple-choice questions. This component of the examination is to be completed in 30 minutes. This component of the examination is worth 25 marks. 17.1 Unit 6 specification Unit title Unit 6: Mortgage Arrears and Post-Completion Issues (MAPC) Ofqual unit reference number Y / 501 / 8720 Unit level 3 Guided learning hours 20 Unit credit value 2 Unit aims i. This unit introduces students to the processes and procedures for raising additional money on an existing mortgage. ii. Students will gain an understanding of the methods of raising extra finance. iii. Students will gain an appreciation of the treatment of clients who experience difficulties in repaying their mortgage. iv. Students will gain an appreciation of the different Page 24 of 38
types of assistance for people who are experiencing mortgage difficulties. 17.2 Unit 6 learning outcomes / assessment criteria Learning outcome (LO) 1. Understand the principles and procedures associated with raising additional money and the circumstances when further borrowing might be appropriate. 2. Understand the principles, procedures and costs of transferring mortgages. 3. Understand the principles of using mortgages within debt consolidation arrangements. 4. Understand the implications for the borrower of the non-payment of mortgages, other breaches of the Mortgage Deed, non-payment of building insurance and the options available. 5. Understand the legal rights and remedies available to lenders in respect of non-payment from borrowers 6. Understand the main provisions made by the State to assist consumers in difficulties over the repayment of mortgages demonstrate that they can understand: U1.1 equity release products; U1.2 further advances; U1.3 draw down facilities; U1.4 release of part security U1.5 remortgages, second mortgages; U1.6 bridging loans; U1.7 charging structures; U1.8 legal implications U2.1 transfer of mortgage to a new lender; U2.2 implications of property moves; U2.3 converting one mortgage to another U2.4 removing or adding one party from or to a joint mortgage; U2.5 implications of redeeming a mortgage before/at the end of its term; U2.6 making additional/lump sum capital repayments on a mortgage, during its term U3.1 relationship between costs/ penalties/repayments/term; U3.2 risk to the consumer associated with consolidation; U3.3 risks associated with moving loans from unsecured to secured status; U3.4 draw down facilities U4.1 when to provide a mortgage warning, ensuring that this is understood; U4.2 possible courses of action available (eg Scotland mortgage to rent scheme); U4.3 regulatory requirements regarding the treatment of those in arrears; U4.4 Mortgage Rights Act (Scotland); U5.1 role of Citizens Advice and other agencies; U5.2 rights of subrogation of insurers to pursue borrowers; U5.3 legal remedies for the lender on default U6.1 Support for Mortgage Interest (SMI) U6.2 52 week linking rule Page 25 of 38
17.3 Unit 6 assessment methodology v. The assessment of Unit 6 has one component: a. 25 multiple-choice questions. This component of the examination is to be completed in 30 minutes. This component of the examination is worth 25 marks. 18.1 Unit 7 specification Unit title Unit 7: Assessment of Mortgage Advice Knowledge (MAPC) Ofqual unit reference number D / 501 / 8721 Unit level 3 Guided learning hours 40 Unit credit value 4 Unit aims i. This unit enables students to provide a holistic assessment of client s mortgage needs. ii. Students will gain an understanding of the analysis of clients circumstances in order to provide suitable solutions. 18.2 Unit 7 learning outcomes / assessment criteria Learning outcome (LO) demonstrate that they can: 1.1 Analyse factors shaping consumers circumstances and borrowing purposes 1. Analyse consumers circumstances and suitable mortgage solutions taking account of any existing arrangements. 1.2 Assess affordability and suitability 1.3 Assess the long term performance of mortgage products 1.4 Analyse methods of identifying and reviewing suitable product solutions 1.5 Assess the impact of new solutions on existing arrangements 2. Apply suitable mortgage solutions to specific consumers circumstances. 1.1 Apply the range of solutions available to suit different types of circumstance 1.2 Apply the criteria for matching solutions to consumer needs and demands 1.3 Explain interest rates, volatility and related technical Page 26 of 38
Learning outcome (LO) demonstrate that they can: matters to lay people 1.4 Analyse factors influencing the way in which recommendations are presented 1.5 Check consumers understanding of recommendations 1.6 Apply consumer rights and the regulatory requirements to the provision of investment advice 18.3 Unit 7 assessment methodology vi. The assessment of Unit 7 has one component: a. 6 case studies, each with 10 multiple-choice questions. This component of the examination is to be completed in two hours. This component of the examination is worth 60 marks. Page 27 of 38
19.1 Unit 8 specification Unit title Unit 8: Fundamentals of Equity Release Advice (FOER) Ofqual unit reference number F / 501 / 8727 Unit level 3 Guided learning hours 60 Unit credit value 6 Unit aims i. This unit introduces students to the different types of equity release products; ii. Students will gain an understanding of the features of different equity release products and their suitability for different consumers. 19.2 Unit 8 learning outcomes / assessment criteria Learning outcome (LO) demonstrate that they can: 1. Know the definition of a Home Reversion (HR) plan & alternative methods of equity release/capital raising. 2. Understand the principles of equity release, the types of equity release schemes available and the circumstances for which such schemes might be appropriate. K1.1 Outline regulatory definitions U1.1 Understand the principles of equity release schemes & the requirements of the regulator s Conduct of Business rules for home finance - including lifetime mortgages (LTMs) and HRs U1.2 Understand the definition of equity release U1.3 Understand different schemes available, how they work and the advantages/ disadvantages of each type of scheme U1.4 Understand the role of market participants in the equity release process e.g. providers, administrators (especially where different from provider), arrangers and advisers U1.5 Understand regional variations within the UK U1.6 Understand the features of HR plans in relation to other schemes and the impact on consumer of what they are giving-up (ownership of all or part of property), the difference between legal and beneficial ownership U1.7 Understand how an HR plan arrangement may be structured depending on provider Page 28 of 38
Learning outcome (LO) demonstrate that they can: U1.8 Understand potential rental and associated charges U1.9 Understand the importance of the consumer taking independent legal advice as regards ongoing responsibilities U1.10 Understand the Equity Release Council (ERC) requirement for a solicitor s certificate documenting that independent legal advice has been provided U1.11 Understand the division of responsibilities between solicitors and financial advisers with regard to HRs U1.12 Understand the status of the HR plan provider and the need to highlight extra risks where provider is not authorised by the regulator U1.13 Understand the market background and market history of equity release products U1.14 Understand the rationale of regulation for consumer protection underpinning both ERC Code and MCOB including high-level generic risks: potentially vulnerable consumers; how mis-buying or mis-selling can occur; need for legal advice; fair valuations; rights and liabilities as tenants; security of tenure; access to redress U1.15 Understand the generic sales process including regulatory requirements 3. The types of consumer at whom equity release is targeted and their personal requirements, wants and needs. U2.1 Understand the personal and property status U2.2. requirements of HR plan providers and consumers potential eligibility for schemes Understand the typical eligibility criteria of HR providers U2.3 Understand the types of consumer who may seek an equity release solution: those who need to realise the value of their assets those who choose to realise the value of their assets demonstrate awareness of generic consumer behavioural matters asset rich/ cash poor, need v choice less need/ desire to leave legacy if adult children are more wealthy U2.4 Understand the requirements for: raising capital in retirement Page 29 of 38
Learning outcome (LO) 4. Understand the circumstances in which equity release may be appropriate and how these are influenced by consumers preferences and financial needs. demonstrate that they can: increasing income in retirement current and expected expenditure levels supplementing a pension in retirement funding home improvements financing health/ long term care needs inheritance tax planning helping family members funding big ticket purchases such as cars, holidays lifestyle choices and personal reasons other than those covered above U2.5 Understand HR plans and impact/ implications for single and joint applicants U2.6 Understand the role of equity release as part of overall retirement planning U2.7 Understand the suitability assessment, taking account of the purpose of the equity release and the investment vehicle utilised U2.8 Understand the rationale for the suitability of equity release where used/ part-used to raise emergency or contingency funds and placed on deposit. U3.1 Understand generic advantages/ disadvantages of equity release in general and lifetime mortgages and home reversion plans in particular U3.2 Understand how customer needs, circumstances, preferences and objectives will inform and lead the process U3.3 Understand savings and investment levels U3.4 Understand customers preference for leaving an estate on death U3.5 Understand increased income/ liquid capital for asset rich/ income poor consumers U3.6 Understand maintaining a level of income/ lifestyle comparable with that of pre-retirement income U3.7 Understand the provision of funds towards cost of health and/or long-term care, lifestyle choices U3.8 Understand the use and appropriateness of equity release as a method of realising assets instead of trading down U3.9 Understand the advantages/ disadvantages of lumpsum products against those offering flexible draw-down U3.10 Understand the advantages/ disadvantages/ suitability of using capital for investment to produce an income as Page 30 of 38
Learning outcome (LO) 5. Understand the impact on consumers future customer options. demonstrate that they can: against utilising an equity release draw-down facility via a lifetime mortgage or HR plan U3.11 Understand the differences between providing temporary or guaranteed income U3.12 Understand product portability whether product accommodates any potential lifestyle change if desired or needed U3.13 Understand portability implications of moving house, right to move (ability to move house under plan) U3.14 Understand the impact on inheritance tax planning U3.15 Understand the lack of inherent restriction on use of lump sum raised via equity release U3.16 Understand the role of ERC and the ERC members guarantee/ SHIP Standards Board U3.17 Understand the importance of taking independent legal advice before completing a HR contract and what this means U4.1 Understand the impact of dying intestate and importance of a valid Will U4.2 Understand the effect upon single and joint occupiers last survivor basis of schemes U4.3 Understand the impact of property being owned singly or jointly; joint tenancy/ tenancies in common U4.4 understand the impact on ability to vary e.g. change of reversion occupiers U4.5 Understand the impact on estate of sale or % sale U4.6 Understand the impact on right to move U4.7 Understand the impact of any inheritance protection guarantees and that the cost of these guarantees to the reversion provider will be passed on to the consumer in the reversion offer U4.8 understand the impact of shared appreciation or house price inflation guarantees if applicable U4.9 Understand the terms and conditions common to HR contracts: rules of occupancy waivers and indemnities for residents other than reversion occupier vacating property time period for occupancy ability to let or sub-let maintenance provisions Page 31 of 38
Learning outcome (LO) 6. Understand the key features, relative advantages and disadvantages of HR plans and the principal products and services that are alternatives to HR plans. demonstrate that they can: need to consult with reversion provider if the occupier wishes to leave the property empty or do structural alterations etc building insurance requirements U4.10 Understand the importance of legally registering the HR arrangement correctly, the HR provider s duty of care to ensure solicitor takes on these responsibilities regarding contract issues, title, registration of lease etc. as appropriate U4.11 Understand the importance of taking independent legal advice before signing legal documentation and commitment to a legal contract; reversion provider s duty of care to ensure that homeowner/ potential reversion occupier takes independent legal advice U4.12 Understand the impact of ending scheme: early and on death or need to enter long term care (qualifying termination event) U4.13 Understand the impact of plan provider s definition of entering long term care U5.1 Understand the features, advantages and disadvantages of HR plans in relation to the individual client/ potential reversion occupier: implications of equity sale property [or share] reverts to reversion provider on death or entering long-term care reasons why amount received under most HR Plans will be less than the open market value if property sold with vacant possession independent valuation requirement other factors influencing provider s offer ability for future equity release if % share retained lifetime lease conditions and implications, and right to reside in property until death or entering into long-term care generic examples of advantages/ disadvantages of HR plans rights of partner to live in property (joint HR plans) last survivor variations in types of HR plan and how these impact on individual client/ potential reversion occupier Page 32 of 38
Learning outcome (LO) 7. Understand the rules relating to state benefits and taxation. The sources of information and specialist advice regarding the implications on these of entering into an equity release arrangement. demonstrate that they can: U5.2 Understand the features, benefits and risks of lifetime mortgages and other equity release schemes U5.3 Understand the grants applicable and tax treatment of different options. U6.1 understand the impact on state benefits and tax position (principle and main areas) e.g. potential impact on age related allowances, means tested benefits such as pension credit and council tax benefits if capital/ income above certain limits, including also local authority funded long term care. U6.2 Understand the methods and sources of information of assessing financial implications of equity release versus impact on benefits U6.3 Understand the need to explore customer s entitlement to benefits including Pension Credit whether being claimed or not. U6.4 Understand the sources of information and specialist advice on benefits and taxation and when to refer U6.5 Understand the potential differences in impact between different equity release schemes U6.6 Understand regional variations. 19.3 Unit 8 assessment methodology vii. The assessment of Unit 8 has one component: a. 50 multiple-choice questions. This component of the examination is to be completed in one hours. This component of the examination is worth 50 marks. Page 33 of 38
20.1 Unit 9 specification Unit title Unit 9: Equity Release Solutions (EQRS) Ofqual unit reference number J / 501 / 8728 Unit level 3 Guided learning hours 60 Unit credit value 6 Unit aims i. This unit enables students to provide a holistic assessment of client s equity release needs. ii. Students will gain an understanding of the analysis of clients circumstances in order to provide suitable solutions. 20.2 Unit 9 learning outcomes / assessment criteria Learning outcome (LO) demonstrate that they can: A1.1 Apply principles of ethical advice and requirements of the regulator A1.2 Apply methods of verifying information supplied by consumers A1.3 Apply methods of checking that equity release solutions match consumers needs, demands and circumstances A1.4 Consider how life expectancy might influence choice of type of equity release product and also how anticipated changes to health might influence the date at which scheme ends. 1. Apply suitable equity release solutions to the circumstances of different types of consumer. A1.5 Consider the importance of deciding whether or not to discuss solutions with the consumers family/ potential beneficiaries and when this is appropriate A1.6 Apply measures to protect consumers interests and their applicability e.g. regulation, complaints processes, FOS, FSCS, ERC, SHIP etc A1.7 Consider the importance of explaining complex technical matters to customers in a way that can be understood and the importance of checking understanding A1.8 Apply rule requirements relating to financial promotions and importantly to the disclosure requirements A1.9 Apply a generic assessment of suitability, including instances when an equity release plan is not the most Page 34 of 38
Learning outcome (LO) 2. Analyse the suitability and affordability of the different types of HR plans and their principal alternatives for different types of consumer. 3. Assess the advantages, disadvantages and potential risks to consumers associated with taking out equity release, and when these might arise. demonstrate that they can: appropriate course of action A1.10 Apply minimum standards for suitability as required by regulator A1.11 Apply the requirements of rules regarding potential reversion occupier taking-up independent legal advice An1.1 Analyse the impact of HR plans including legal title, impact upon death, tenant status and considerations as regards property insurance and property maintenance, opportunity for further equity release if only part sold initially, impact of choice on estate An1.2 Analyse lifetime mortgage products and options An1.3 Analyse the option of trading down to release equity An1.4 Analyse the potential letting part of the property to generate an income An1.5 Consider disposing of other available assets first An1.6 Analyse conventional borrowing options e.g. ordinary remortgage, bank loan An1.7 Consider the potential availability of grants what options may be available and where to find relevant information and/or advice An1.8 Analyse sale and rent options An1.9 Consider the do nothing option e.g. avoid equity release by reviewing/ adjusting lifestyle, income/ expenditure management An1.10 Consider informal arrangements e.g. money from relatives An1.11 Analyse restructuring of existing personal pension arrangements where possible/ practical or ways of increasing income e.g. seeking part-time paid work An1.12 Analyse sources of debt advice where monies are wanted to pay off debts An1.13 Consider how personal health circumstances and needs affect choice of products An1.14 Analyse the need to establish current level of savings and investments An1.15 Consider anticipated legacies and inheritances As1.1 Assess factors that influence whether the consumer has access to further funds e.g. possible restructuring of pensions and investments As1.2 Assess the ability/ inability to repurchase or inheritors to repurchase equity share and financial implications of seeking to repurchase equity share Page 35 of 38
Learning outcome (LO) demonstrate that they can: As1.3 Assess the impact of increased capital/ income on means tested benefits including availability of local authority funded long term care As1.4 Assess the impact on tax liability As1.5 Assess the impact of use of finite resource e.g. sale proceeds can only be spent once, impact of inability to use/ finance for later long-term care needs etc As1.6 Assess the likelihood that a surviving spouse will need/ want to move and impact equity release arrangements have on future choices As1.7 Consider the impact of limitations within lease e.g. on having someone move into the property As1.8 Assess the principal terms of [lifelong] lease As1.9 Assess the impact of terms and conditions arising from variations in type of HR plan As1.10 Assess the potential restrictions regarding future alterations to the property and impact of any repair/ maintenance and insurance clauses As1.11 Consider the impact of divorce and/ or remarriage As1.12 Consider other factors and costs associated with taking out a HR plan and timescale required to complete the process As1.13 Assess the impact of future inability to sublet or allow anyone (including family members) to gain tenancy rights or even live in property without permission of reversion provider As1.14 Assess the impact of inflation on fixed income (if funds intended for investment or annuity to produce a regular income line) As1.15 Consider the impact of length of time taken to complete As1.16 Assess the impact of not being able to use home for as security for potential future borrowing, loans or mortgage As1.17 Assess the purpose of the loan 4. Assess the relative levels of risk for different consumers taking account of their individual circumstances. As2.1 Consider life expectancy As2.2 Consider health considerations As2.3 Assess the amount of equity and amount consumer wishes to release As2.4 Consider the purpose of the equity release As2.5 Assess the impact upon any beneficiaries Page 36 of 38
Learning outcome (LO) demonstrate that they can: As 2.6 Assess existing and planned provision for longterm care 20.3 Unit 9 assessment methodology viii. The assessment of Unit 9 has one component: a. 3 case studies each with 10 multiple-choice questions. This component of the examination is to be completed in one hour. This component of the examination is worth 30 marks. Page 37 of 38
About the Institute of Financial Services The Institute of Financial Services supports and promotes professionalism in the regulated advice sector and the wider financial services industry. It does so through the provision of qualifications, continuing professional development services and through the dissemination of best practice. The Institute is a division of the ifs University College, a registered charity, incorporated by Royal Charter and is recognised as an awarding organisation by Ofqual. Institute of Financial Services ifs House 4-9 Burgate Lane Canterbury Kent CT1 2XJ T: +44 (0) 1227 818609 (option 1) E: customerservices@ifslearning.ac.uk W: www.iofs.org.uk Page 38 of 38