Equity release providers are concerned about consumer research from the Financial Services Authority which shows the over-65s are one of the age groups least aware of FSA regulation.
The worry among providers is that the safety of releasing equity from properties is being lost on consumers who do not understand the role of the FSA in regulating the sector.
In July the FSA published a report which looked into consumer awareness of itself as well as financial regulation in general.
It found that one of the groups least aware of FSA regulation was the over- 65s – the age bracket of equity release customers.
It also found that the consumers who had little or no knowledge of the FSA were also those most likely to be cautious about investments.
Alison Beeston, compliance and communications manager at Bridgewater Equity Release, says the FSA’s findings are of concern.
She says: “Given that we distribute exclusively through the intermediary channel it is important that our broker partners communicate regulatory concepts to their clients. “Brokers should not simply assume this knowledge is al-ready there.”
Stuart Wilson, managing partner at the Equity Release Club, says the findings of the research are troubling given the millions of pounds the regulator takes from brokers in fees.
He says: “The regulator needs to do a better job of communicating what it is there for. It needs to ask itself what impact its communication is having because our customers do not even know the sector is regulated.”
But Georgina Smith, sales and marketing director at provider Stonehaven, says: “While it would be great for the FSA to have a higher profile in our target market, our experience is that consumers generally undertake their own research before making any decision about lifetime mortgages.
“At the point consumers are ready to buy, they are aware of the FSA and Safe Home Income Plans.”
She adds: “The advisers we have worked with understand the value of both the FSA’s and SHIP’s safeguards as key selling points.”