The Australian Securities and Investments Commission (ASIC) has confirmed financial planners are permitted to issue advice on Centrelink’s Home Equity Access Scheme (HEAS) — formerly known as the Pension Loans Scheme (PLS).
The scheme enables pension-aged Australians to supplement their retirement income by accessing equity in real estate as security for a loan.
Financial planner Michael Miller had sought clarification from ASIC regarding the industry’s eligibility to provide HEAS advice, given the scheme’s similarity to a reverse mortgage.
“I had always felt this left a real gap in advice,” he said.
“The broking sector is predominantly remunerated by the commission, and there is no commission paid on the HEAS, and the borrowing amounts are small so even if there were a commission, there would be little incentive to provide this service.
“…The HEAS is rarely used in isolation — a potential user of the scheme may have age pension entitlements, and financial products such as a superannuation pension or annuity.”
In response, ASIC confirmed debts issued under the scheme are “not considered credit contracts” under the National Credit Act.
Mr Miller welcomed ASIC’s determination, particularly off the back of recent changes to the scheme, which increased the number of payments available to retirees.
Reforms also broadened the availability of the scheme to retirees who are not eligible for an age pension.
“…Despite the credit-like features, ASIC does not consider the HEAS to be a credit product, so financial planners are able to include this advice in their retirement plans,” he added.
In the Royal commission we saw hairdressers, real estate agents etc all recommending loans.
So here we go again.
What’s to stop a solicitor suggesting a client to use HEAS to pay his/her legal bill, or a surgeon suggest HEAS to pay for an operation
ASIC just doesn’t have the strength, or integrity, to clearly announce HEAS is a credit product. The Department calls it a loan and a reverse mortgage.
Time for the Minister to call out ASIC.
And now we see a reverse mortgage lender buying a company that helps borrowers apply for HEAS. It is no wonder all those enquiries will end up with the lender and not HEAS as best interest in not required
This is good to get clarification, as I can see it being used more into the future.
Although I’m not sure that anyone applying for a HEAS would still have other investments being advised on…?
…until 10 years down the track when ASIC change their interpretation and retrospectively penalise any adviser who provided advice on HEAS without a credit licence