Simon Chalk, later life planner at Later Living and chairman of the Society of Equity Release Advisers, says all sales should be conducted on a fully advised basis as expert advice is needed for such a hige decision.
The FSA paper notes that there are “two distinct sectors in the equity release market (lifetime mortgages and Home Reversion plans)” and it “would expect equity release advisers to disclose the scope of the service they offer in each market sector.”
But Chalk says: “This is wholly inadequate. The FSA should insist that intermediaries advise on both types of equity release plans and consider the affordability of alternative traditional capital raising methods such as an interest-only or repayment mortgage.
Those who offer just one type of equity release product are not true specialists and may short change consumers in pushing their limited proposition, particularly where the adviser only has regulatory permissions to offer Lifetime Mortgages.
“In many cases homeowners would be better served with a Home Reversion Plan than a Lifetime Mortgage, yet comparatively few are recommended, due in part to the failure of FSA to tighten up the advice process.
“It is disappointing that the regulator has devoted just a single page of its 98 page paper to an area as important as equity release, demonstrating that they do not understand our specialized sector and the vital role the family home will play in providing for the futures of millions of people in retirement.”