Simon Chalk, later life planner at LaterLiving, said the regulator’s proposals on distribution and disclosure offer no improvement for equity release customers by not insisting brokers offer advice on both lifetime mortgages and home reversion plans.
He said that non-advised sales were “totally inappropriate” and expert advice on equity release was essential.
However, the FSA has only said that it “would expect equity release advisers to disclose the scope of the service they offer in each market sector”.
Chalk said: “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.”
Chalk added that a home reversion plan was more suitable for many homeowners, yet relatively few are recommended, in part because the FSA has failed to tighten up the advice process.
Chalk said: “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.”
