The Society of Equity Release Advisers wants to see a ban on telephone sales of equity release and changes to equity release permissions to boost consumer protection.
The equity release adviser trade body has today submitted its response to the Financial Service Authority’s Mortgage Market Review.
One of the issues the regulator put forward for consultation was to assess what the impact would be for consumers who were not allowed to roll up broker fees and product charges into the mortgage.
SERA argues that this would hit the equity release sector hard as many consumers consider plans because they have little savings or upfront cash.
The trade body says that advisers would not be able to offer equity release without charging fees, which could lead to consumers taking out an unsuitable plan or unable to afford to take out a plan at all.
SERA has also called for firms to be required to hold joint permissions for home reversions and lifetime mortgages in order to advise on equity release, so that both products can be offered to clients.
It also believes that face-to-face advice is the only way of checking consumers’ are mentally fit enough to make the decision on taking out an equity release plan and understand the risks.
SERA is concerned that telephone sales for equity release can force home owners to take out a plan under duress.
Simon Chalk, chairman of SERA, says: “We concur with FSA’s proposals in the main but remain concerned that equity release continues to be seen as a ‘mortgage sale’ and hasn’t been recognised as a wholly different proposition, sharing more common features with financial planning products.
“Less than two pages of the 118-page Discussion Paper DP09/3 are devoted to equity release.
“We urge the FSA to engage with us in order to improve standards of advice, ensuring better consumer protection.”