How to avoid poor equity release mortgage advice
Consumer research organisation Which? has published the findings of a mystery shopper exercise into equity release mortgage advice. The undercover investigation found a huge difference in the quality of advice, and said that it uncovered examples of “incredibly poor” service in several cases with 4 out of 22 advisers failing tests.
Which? have said, that a ‘good’ equity release mortgage adviser should discuss their status, explain how they are regulated and how much of the market they cover. Their remuneration should be discussed at the beginning of the conversation. The 'mystery shopping exercise' found that less than half of the advisers tested carried out a full discussion of these issues, 3 failed to discuss their fees and others failed to provide a disclosure document as required by FSA rules.
The exercise found of the 22 advisers, 12 did provided comprehensive equity release mortgage advice. Those 12 mentioned both home reversions and lifetime mortgages as well as discussing the interest rates and the downsides and limitations of equity release. However, 9 failed to discuss basic product features, 3 failed to describe the interest rate and how interest costs grow over time and 6 failed to mention that house prices could go down as well as up. In addition, 10 failed to discuss alternatives to equity release mortgage “adequately”, including downsizing, borrowing money from family or taking in a lodger.
