FSA: Most customers given bad advice on equity release
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Your support makes all the difference.The Financial Services Authority (FSA) warned yesterday that more than 70 per cent of financial advisers give bad advice, or even mis-sell, to their clients when selling equity release products. It said it may be forced to resort to enforcement procedures to crack down on the problem.
The Financial Services Authority (FSA) warned yesterday that more than 70 per cent of financial advisers give bad advice, or even mis-sell, to their clients when selling equity release products. It said it may be forced to resort to enforcement procedures to crack down on the problem.
Having completed a seven-month investigation into the sector, the regulator said bad practice had been endemic in the equity release sector, with most advisers failing to collect crucial information about their clients before making product recommendations.
It said the findings were particularly worrying in light of the fact that most equity release customers are elderly and potentially vulnerable.
The report corroborated research carried out by The Independent last July, which revealed many equity release advisers are encouraging customers to draw down more money than they need from their property, and then advising them to invest part of the proceeds. This ensures that the adviser gets a double-dip of commission.
Clive Briault, the managing director of retail markets at the FSA, said: "Our work has found another disappointing instance of consumers being given poor-quality advice. What makes matters worse in this area is that these consumers tend to be elderly and vulnerable people who can ill afford to be unnecessarily exposed to risk. We will be carrying out further work in this area and we expect senior management to ensure that their advisers are giving appropriate advice, and to deal with any concerns that we identify."
Ann Foster, the chairman of the Financial Services Consumer Panel, said: "The consequences of receiving bad advice are far reaching and can lead to considerable problems in old age. These are damning results for those advising on equity release. We call on the FSA to take strong follow-up action to make sure that they carry out their statutory duty to protect consumers of financial services in the area of equity release."
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