Equity release advisers fail Which? test

An undercover investigation into equity release advisers has found that two-thirds failed to pass benchmarks for good advice.

Posing as customers, Which? researchers visited 40 advisers and found only five out of 12 equity release specialists passed the Which? test, compared with eight of the 28 independent financial advisers.

The mystery shop found that 23 advisers failed to conduct a fact-find on each customer. It also found that seven did not ask about income. Some advisers did not mention how quickly the debt would grow or discussed the effect of compound interest.

Almost half did not mention or dismissed out of hand home reversions. Many were backwards in coming forwards about their fees with 13 advisers did not discuss this until later on and a further five did not mention them at all.

Martyn Hocking, editor of Which? magazine, said: “Opting for an equity release plan is a big decision and it is not one that should be taken lightly. Which?’s investigation has uncovered some major flaws in the equity release advice process. We would like to see a tightening up of the advice process.”

In response, Andrea Rozario, director general of Safe Home Income Plans said the products and the actual fundamental outcome of advice were not criticised. She commented: “This is a step forward from last year when it branded equity release a ‘product of last resort’. But continuous improvement is needed. The fact that Which? has found issues with the processes of some of the 40 advisers reviewed shows there is absolutely no room for complacency.”

She added that many of the shortfalls could be due to the process of explaining the product rather than significant gaps in advisers’ knowledge. “Any advisers who are practising in this arena but are not confident in their skills should take action immediately.”