Despite the findings of the report, significant efforts are being made to deliver a high quality service to the customer, but clearly there is still work to be done.
In recent years, the pace of change in the equity release market has been rapid, and significantly faster than in the much larger and more established general mortgage market.
We have seen lenders come and go, and the number of cases and amounts being lent increasing significantly. Coronavirus has slowed the growth, of course, but there is still so much potential.
Such growth will inevitably lead to a swift increase in the number of advisers, many of them migrating across from general mortgage advice.
Unfortunately, inexperience and lack of engagement with the available support can mean some advisers may not be hitting all of the required points needed to deliver bulletproof sound advice.
In depth advice
The starting point is the first client meeting where a thorough understanding of the client’s situation is gained simply by talking and note taking. This is not the same as filling in a form.
An equity release plan can be an emotive subject; it is therefore important to understand what is driving the client’s thoughts, and to share their views and feelings about what you are telling them.
The FCA did note that advisers were not making enough reference to the actual words that clients used to express their feelings about things.
Where equity release is recommended, we must be careful to also explain why other alternatives were not.
Can they downsize? Pay the interest? Sell an asset? No? Challenge it – why don’t they want to? And make sure you record their answers in your suitability report.
Advisers should also be prepared to challenge their client’s assumptions about things.
I see clients who have a nest egg in the bank which they say they do not wish to touch. However, sometimes the amounts held are significant, and so we have a conversation about the cost of borrowing whilst the savings languish in a low interest account.
Using some of the savings and borrowing less initially makes more financial sense in some cases, and a drawdown plan can be put in place to provide for the future when the savings run out.
Industry support
There is a good deal of support for the equity release adviser, including the Equity Release Council who have stepped up their game in recent years in helping advisers deliver high quality services.
This includes the recently revised ‘adviser checklist’ which has just been released and which provides a good summary of all matters that should be considered.
Also supporting advisers are the teams at Answers in Retirement and Advise Wise. These both have intelligent sourcing platforms, and a range of other materials to help the adviser do their job compliantly, ethically, responsibly and with integrity.
