It is “madness” that the Financial Conduct Authority allows firms to solely offer equity release advice, South Coast Mortgage Services director, Gareth Davies, has argued.
Davies said there is a higher risk of dealing with a vulnerable individual due to the demographic that seeks equity release advice.
“For me, to offer true advice, you must consider all areas of lending for an individual,” he explained.
He added: “In the past week alone, we’ve spoken to a client that had recently been advised to take a £200,000 equity release product.
“Don’t get me wrong, they could get it with ease, but after a call to us, it was obvious that it wouldn’t be the most cost-effective or suitable solution for them, and would likely have cost them thousands of pounds more than necessary.
“How can that be right in this day and age of regulation?”
A similar sentiment was shared by Montgomery Financial director, Charles Breen, who said: “To a hammer, everything is a nail and the same applies to equity release advisers who only offer equity release.”
Meanwhile, Release Freedom director, Simon Bridgland, said: “The issue is when the specialists are simply equity release specialists, single product sellers.
“If an adviser hasn’t got traditional mortgages in their kit-bag then that adviser will simply sell the service they have.”
Bridgland added that the rapid evolution of later-life products could mean they become more like traditional mortgages going forward.
As a result, a broker who doesn’t offer the whole solution will find themselves being “singled out” and perhaps considered not to be “acting with consumer duty in mind”.
One trick ponies
The Mortgage Expert's Darryl Dhoffer stated that equity release specialists at many of the larger equity release firms are “effectively one-trick ponies”.
He explained: “They may only be able to recommend equity release products, even if there are other products that would be more suitable.
“This is because they are not qualified to give advice on other types of mortgages.
“As a result, consumers who use equity release specialists may not be getting the best possible advice. They may end up with a product that is not suitable for their needs.”
Additionally, UK Moneyman head of later life lending, Dan Osman, warned: “Dealing with the financial affairs of later-life clients is very much a specialist area where partial knowledge can lead to significant foreseeable harm.”
Thanks to the Newspage community for sharing their thoughts with FTAdviser.
tom.dunstan@ft.com
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