But the Financial Services Authority is giving advisers in the equity release market a fighting chance by providing a picture of what good looks like. And importantly, it has gone to some lengths to show us what bad looks like too.
Following its September publication of the details of its mystery shopping exercise, the regulator seems determined to ensure there are no excuses.
The mystery shopping exercise found a lack of systems and controls in the market, particularly among those termed as dabblers.
To ensure advisers and firms get the message about what good looks like, the FSA has published a document which gives details of what it deems good and poor practice.
The document is aptly named Lifetime mortgages: examples of good and poor practice. Some of the practices highlighted include:
• Advising clients not to do equity release when they clearly have access to other funds.
• Discussing with clients the potential availability of benefits and grants.
• The use of constructive advice-checking regimes where the overall quality and suitability is assessed.
• Consideration within the sales process of early repayment options and ensuring that clients understand their options.
• Not providing Initial Disclosure Documents.
• Using fact-finds which are not sufficiently tailored to the sales process for lifetime mortgages, leading to cases of insufficient information being gathered.
• Eligibility for loans or benefits not being discussed.
• Clients being provided with excessive rainy day funds without clear documentation.
This is just a selection of points raised in the document and anyone advising in this area should look at it carefully.
As well as the good and poor practices highlighted, the regulator goes to great lengths in drawing out its concerns, in particular regarding firms for whom lifetime mortgage sales are a minority of business. It highlights the fact that advisers are not being properly prepared to give advice and sometimes not meeting minimum standards.
The concerns go on. I recommend that you get hold of a copy now.