FPA welcomes Choice shadow shopper findings on reverse mortgages

Jo-Anne Bloch

The results of a shadow shopping survey of reverse mortgages by consumer protection body Choice this week “reinforces the need for good financial advice”, according to Financial Planning Association (FPA) chief executive Jo-Anne Bloch.

“Reverse mortgages can be a useful part of a financial strategy, but they are a complex product and should only be used on the advice of a licensed financial planner,” she said.

The Choice shadow shopping survey of 10 mortgage brokers and five companies offering reverse mortgage products found consumers often did not receive enough information to make a truly informed decision about the product.

It prompted Choice to call for an improvement in the standards exhibited by mortgage brokers in regard to the information and advice they are issuing to the public about reverse mortgage products.

Providing appropriate advice for a client is a “clear obligation” for FPA members under the association’s Rules of Professional Conduct, according to Bloch, regardless that reverse mortgages do not “fall neatly” under the Corporations Act.

“A decision to use a reverse mortgage should take account of a client’s individual circumstances,” she emphasised.

Meanwhile, the FPA has welcomed the Simplified Superannuation reforms, which passed through the Federal Senate into law earlier this week.

Bloch said the FPA was “pleased with the Government’s open and consultative approach to the reforms and appreciated the Labor Party giving the legislation bipartisan support”.

“We are particularly happy that the Government’s decision to scrap reasonable benefit limits (RBLs) reflected the recommendations of a number of FPA submissions.”