CeMAP FRE2 Advice Skills: Fact-Finding to Recommendation question: approach to identifying solutions

CeMAP FRE2Advice Skills: Fact-Finding to Recommendation

Fiona, 52, wants to release £40,000 from her home to help her daughter with a deposit. She has a modest income and 13 years to retirement. Which approach to identifying solutions is most appropriate?

A Start with the lender's further advance, then look at other options if it is declined
B Compare lifetime mortgages from several providers, as at 52 she now qualifies for them
C Compare the realistic options, since they differ in affordability, cost and risk
D Compare personal loan rates, as unsecured borrowing keeps her home out of the risk

Show the answer and explanation

Answer: C. Compare the realistic options, since they differ in affordability, cost and risk

Identifying appropriate solutions means considering the realistic options and comparing them against the client's needs, affordability and risks, including borrowing into retirement (MCOB 4.7A.6R; MCOB 11.6 affordability; FSRE LO6 AC6.1 identifying appropriate solutions). Starting with one product and moving on only if it fails, or comparing within a single product type, ignores the alternatives. Equity release is a specialist product needing specific permissions and is not automatically right at 52, and a personal loan of £40,000 on a modest income may be less affordable than secured options.

Common mistake

Fixing on one product before considering alternatives.

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Original practice material mapped to the published CeMAP FRE2 learning outcomes. Independent, not endorsed by Walbrook (formerly LIBF). Verify figures and rules against current guidance before relying on them.