There’s a growing concern among financial experts about the way equity release advice is being handled in the UK. In FT Adviser, Gareth Davies, the director of South Coast Mortgage Services, labels it as “madness” that the Financial Conduct Authority (FCA) allows firms to only offer advice on equity release products. This specialised advice, according to Davies, poses a “higher risk” of dealing with vulnerable individuals, primarily because of the demographic typically seeking equity release.
The Risk of Incomplete Advice
Davies argues that to give truly comprehensive and beneficial advice, all lending options should be considered for an individual. He cites a recent example where a client was advised to take a £200,000 equity release product. After consulting with Davies’ team, it became clear that this option was neither cost-effective nor suitable, potentially costing the client thousands of pounds more than necessary.
Industry Voices Echo Concerns
Charles Breen from Montgomery Financial and Simon Bridgland from Release Freedom share Davies’ concerns. They suggest that equity release advisers who only focus on this product are like “one-trick ponies,” potentially overlooking more suitable financial solutions. Bridgland points out that the rapid evolution of later-life products might lead them to resemble traditional mortgages, making a single-product approach even less justifiable.
The Danger of Limited Expertise
Darryl Dhoffer from The Mortgage Expert criticizes large equity release firms, where specialists often recommend only equity release products, neglecting other potentially more suitable options. This limitation often stems from a lack of qualification in advising on other mortgage types, leading to customers possibly ending up with unsuitable products.
A Call for Comprehensive Knowledge
Dan Osman, head of later life lending at UK Moneyman, highlights the intricate nature of dealing with financial affairs of later-life clients. He warns that partial knowledge in this field could lead to significant harm, underscoring the need for more comprehensive expertise among advisers.
A Call for Change
The consensus among these financial experts is clear: there’s a need for a broader and more holistic approach in mortgage advice, especially concerning equity release. This approach would better serve the varied needs of consumers, particularly the vulnerable elderly demographic, ensuring they make the most informed and beneficial financial decisions. As the industry evolves, the hope is that regulation and practices will adapt accordingly, prioritising consumer welfare and financial security.