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SERA calls for ban on equity release phone sales

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.

SERA chairman
Simon Chalk

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.”



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  • Alan J Nadin 1st February 2010 at 4:46 pm

    Dear Mr Ebsworth, there are many distribution channels for businesses and no doubt Tim Loy is educated enough to appreciate the potential for abuse in this vulnerable sector of society.

    There are many firms who solely operate very professional mortgage and other financial advice over the telephone as it is indeed a modern way to conduct business to the highest professional standards, like yourself, but via what could be perceived to be a smarter way of working as not only can advisers or brokers spend more time devoted to the case than driving for hours and having to deal with traffic issues preventing them from completing the journey on time, or in some cases at all. As long as the training and compliance regime of the firm providing the advice is properly run with TCF at it’s heart, then it really doesn’t matter what the adviser looks like on the other end of the phone, or whether they can see each other. Some clients actually prefer the comfort of not having someone in their home whilst they consider options as someone’s physical presence could also be off-putting. Whilst the nuances of body language and facial expression is clearly missed, assuming the Telephone based adviser (NOT TELESALES as they are as qualified as you!) are able to Listen and Question in the correct manner, then they will also be able to advise appropriately.

    In fact many of the most successful and highly reputed IFA’s/Mortgage Brokerages are heavily telephone based. Everyone has their own preference of working and none are better than the other, depending on what you prefer and your business model.

    Essentially, it is customer choice and those who do not like either, can choose an alternative, thereby remaining fair for all, clients firstly and adviser, would you not say?

    The business environment is challenging enough, for us not to be chipping away at each other, based on either self-preservation, or just a lack of consideration of the bigger picture.

    We all need to work together to support our industry and each other.

  • Dave Ebsworth 1st February 2010 at 2:33 pm

    It is fair to say that there may be benefits for a telephone sales model to be used in this line of business. Benefits mainly to the marketing company I suspect.
    However there is a lot to be said for the personal touch, much can be learned from seeing a client in their own environment and it is often said that a large part of communication is by body language rather than what is spoken. For example a quizzical look on a clients face when explaining the details of a plan cannot be seen over the phone. And if asked over the phone if they understand many will say “yes” just not to sound silly. How can a telesales person really be sure that a client fully understands if they cannot see their client’s face.
    One must remember that many ER buyers (not all I grant you) are in the vulnerable group of society so time and care has to be taken with these clients. The impression that comes to mind of a telesales/adviser firm is of pressurised conveyer belt type sales being made. I may be doing this part of the industry a dis-service and if so I apologise but I would think TCF is much harder to demonstrate for this type of set up than for a face to face meeting. I certainly would not want a relative of mine gaining such important and high risk advice from a faceless voice at the other end of the telephone.

  • Tim Loy - CEO Age Partnership 1st February 2010 at 12:28 pm

    It is both surprising and disappointing that SERA and its Chairman, Simon Chalk, have chosen to call for a ban on telephone-based equity release advice. This is clearly an uninformed view, riddled with self interest.

    Age Partnership is the UK’s fastest-growing equity release intermediary and provides all of its advice over the phone. This clearly indicates that a significant proporion of clients prefer this option.

    Simon Chalk clearly does not understand the benefits of the telephone-based model, enabling, amongst other things, every conversation between adviser and client to be recorded and scrutinised for training and compliance purposes.

    I firmly believe that there is a place for both over-the-phone and face-to-face advice in the field of equity release and, ultimately, that customer choice is paramount. The important thing is that, whatever model is used, advisers should ensure they have the appropriate systems and training in place to deliver the client clear, independent and honest advice.

    This kind of comment is unhelpful to an industry that has faced many challenges over recent times; and I hope that both Simon Chalk and SERA will review their position to take a more objective view in the future.