Providing advice on the Home Equity Access Scheme

The Australian Government offers a scheme where Australians of pension age with a residential property can obtain a loan from the Federal Government that is secured against the person’s house. ASIC has confirmed that the HEAS is not classified as a credit product and providing advice on the scheme does not require a credit licence.

Whilst this scheme has been available for many years, it has only recently come into increased prominence as a result of Federal budget changes.  The utilisation of this scheme has not been material, and it has not been common in the thinking of financial advisers until more recently.  In fact, in the middle of 2019 there were less than 1,000 Australians who had accessed the scheme.

The scheme, which was previously known as the Pension Loan Scheme, was subject to improvements in the 2019 and 2021 Federal Budget, which has improved the attractiveness of the scheme and increased its relevance from a financial advice perspective.

Canberra based financial adviser Michael Miller from the firm Capital Advisory, recently wrote to the Government seeking clarification on the licensing requirements to provide financial advice on the Home Equity Access Scheme (HEAS).  Mr Miller’s concern was whether a credit license would be needed to provide advice on the HEAS, as is the case for the similar commercial product (reverse mortgages).  He recently received a response from ASIC confirming that a credit licence was not required as this applied to credit products obtained under a credit contract.  The HEAS is a Government scheme where the loan is obtained under Federal statute.  We thank Michael Miller for obtaining this clarification.

Whilst approval by licensees would still be required to provide advice on the HEAS, it is important for advisers to understand that they do not need a credit licence.  This clarification should hopefully open up the HEAS as a scheme that financial advisers can more readily provide advice on, for their older clients, particularly those with cashflow challenges.

Please click here for more information on the Home Equity Access Scheme.