Brokers shy away from equity deals

Smaller brokers are shying away from the equity release market following the Financial Services Authority’s mystery shopping exercise into the sector, a leading industry figure claims.

Dean Mirfin, business development director at Key Retirement Solutions, makes the claim in this week’s Mortgage Strategy cover feature.

This comes in the wake of the FSA’s investigation that revealed seven out of 10 advisers fail to gather enough information on their clients to offer adequate advice, while too many fail to explain the potential downside of equity release.

Mirfin says: “The lion’s share of equity release is still done by small IFAs doing the odd case here and there.

“They are the ones most scared by the FSA and are now asking themselves whether the risks are worth the tiny income they earn from this work.”

Mirfin believes the market will rise from about 1.5bn this year to 7bn in 2008. But not all experts agree. Brendan Kearns, proposition development manager for equity release at Norwich Union, says the 7bn prediction is far too optimistic.

He says: “The Institute of Actuaries recently predicted the market might reach 2bn by 2010 and I would broadly agree with that.”