The Financial Services Authority published examples of good and bad practice in the equity release sector last week.
The regulator says it found that performance varied significantly between firms and in some cases standards were unacceptable. Of particular concern were so-called dabbler firms for which lifetime mortgages are not a significant part of their business.
In its report, the FSA says: “We have made a commitment to reassess the advice standards in this market in 2007.”
This has sparked speculation that another mystery shop is imminent. Dean Mirfin, business development director at Key Retirement Solutions, says he expects more mystery shops in 2007 but that these may target firms the FSA deems high risk.
But he adds: “If this mystery shop isn’t targeted at dabbler firms it will take resources away from where the risk is, as defined by the FSA.”
Roger Hillier, lifetime product development manager at Mortgage Express, says: “I’m not sure this report means more mystery shopping. It probably doesn’t as another exercise would have been announced. I hope the FSA will focus on the dabblers it has identified as causes for concern.”
But he adds that another mystery shop covering the whole lifetime mortgage sector would be disappointing and that ad hoc checks against firms the FSA deems risky would be more appropriate.
Jayne Almond, chief executive of Stonehaven Equity Release, says she suspects the FSA may look at dabblers in the sector but she is not expecting more mystery shopping across the whole market.
An FSA spokeswoman says there could be more mystery shops but it is too early to be definite about this.
She adds: “This is a live issue and we have yet to have a formal plan about what we’ll be doing and when.”