Which? carried out a mystery shopping investigation of 22 qualified equity release advisers and found that the advice given to pensioners fell short of the benchmark with 20 per cent failing the tests and only two cases of excellence.
Equity release is usually considered by pensioners who have no mortgage on their property and wish to free up funds. It is precisely because of this that an adviser should explain the issues properly. There are two schemes; home reversions and lifetime mortgages. These should both be discussed together with interest rates and how the debt will grow. House prices should also be discussed as well as the set up costs for the schemes.
The Which? investigation showed that 12 advisers dealt with these issues comprehensively but that nine advisers failed to discuss the basic product features, three neglected to discuss the interest rate and how these costs would increase over time and six neglected to advise that house prices could decrease.
Four of the visits carried out by Which? were near perfect, only missing one or two key points.
Which? reports that one adviser went so far as to suggest that the 75 year old researcher should take out more money and invest it.
Good advisers will discuss regulation, status and fees right at the start. Fewer than half of the advisers did this, with some failing to provide a disclosure document, an FSA requirement. Best practice dictates that advisors should conduct full enquiries into assets and outgoings, provide a full explanation of how the deals work and also proffer alternatives, such as downsizing. First and foremost it “must” be right for the Client.
Have you acted for Clients on equity release schemes? Does your firm have procedures in place to safeguard Clients?
Today’s Conveyancer, bringing you the latest conveyancing news and updates.
