CPA Australia and the Senior Australians Equity Release Association of Lenders (SEQUAL) have launched a joint guidance note in order to help CPA members advise on reverse mortgage products.
Research shows more than 50 per cent of dealer groups now have some processes in place to deal with enquiries about reverse mortgages, so the guidance is being provided to help CPA members better understand the available products, assess possible risks and understand potential benefits for clients.
"Advice is a very important part of understanding reverse mortgages, given the complexity of the product," CPA Australia financial planning policy adviser Kath Bowler said.
"It's important that our advisers understand the nuances of reverse mortgages and provide the most accurate advice to their clients, who can then make informed decisions."
The best practice guidelines were developed to assist licensed and unlicensed members and were not a requirement for members at this stage, she said.
"It's an important first step to change the perception that these products are all bad," she said.
"Both CPA Australia and SEQUAL are keen to communicate the importance of transparent, accurate advice about reverse mortgages."
CPA Australia, through its APS 12 Statement of Financial Advisory Service Standards, recommends planners adopt a fee-for-service model with no alternative remuneration structure.
Reverse mortgages, which target under-funded retirees, have been used by up to 20,000 Australian home owners and have a combined $1.1 billion in loans as of June 2006, with the market growing at around 40 per cent a year.
Reverse mortgages are still not regulated under the Financial Services Reform Act.
