It’s good to see Esther Rantzen is still the consumers’ champion and I am delighted that she will be raising the profile of equity release mortgages by linking her name with Cav-endish Equity Release, a significant player in the equity release market.
The company was formerly known as the Equity Release Information Centre but recently changed its name to the more financially upmarket-sounding Cavendish.
A couple of weeks ago I was contacted by a lady who had received information from Cavendish about equity release schemes.
She was not sure how independent its advice would be and she had therefore sought out her local IFA for a second opinion. Not initially being aware that Cavendish was the erstwhile ERIC, I went along for a chat.
At this point you may be expecting me to say how awful its advice was but no – quite the opposite. The Cavendish adviser had gone through a seemingly thorough fact-find process with the client and had provided her with a Key Facts Illustration.
I have to admit that I would almost certainly have recommended the same lender to this client as she was a prime candidate for a drawdown scheme.
In fact, the adviser had been in touch with this lady for well over a year while she looked into her options and I believed the client when she told me that the company had not pushed or pressured her in any way.
Cavendish’s literature is clear and guides clients through the equity release process in a straightforward way, giving pictorial details of identity and address verification details needed. I was impressed.
But, as you will have guessed, there is a catch. On looking through the paperwork and on Cavendish’s website I noticed that it is standard practice for it to charge a 2.5% fee. And a minimum of £695 must be charged, as this was on my lady’s KFI.
She is only borrowing £10,000 so this equates to a 6.95% fee. While that is pretty high in percentage terms I understand that Cavendish has to cover its costs which the £500 proc fee might not be sufficient to do.
I would not normally charge this client anywhere near this amount and I told her so. What is reasonable and profitable to me may not be so for another company.
But we both agreed that Cavendish had already worked hard on her behalf, had earned her loyalty and I could not disagree with its advice. So she is going ahead through the company and I don’t blame her.
I have no problem with most of this – advisers must make a living and cover their costs. And the client in this example received excellent advice and service.
My problem is with Rantzen, who claims she has spent the past year investigating this market and finding an adviser she would be happy to lend her reputation to. Perhaps Cavendish would argue that you get what you pay for, but as consumer tsarina I’d have hoped that Esther would have something to say about that.