Two Thirds Of Equity Release Advisers Fail Which? Test

Posing as customers, Which? researchers (http://www.which.co.uk/advice/equity-release-explained/index.jsp?CMP=PRHUBTEST1 ) visited 40 advisers** and found that only a third of them met all the benchmarks for good advice set by Which?  Overall, five out of 12 equity release specialists passed the Which? test, compared with eight of the 28 independent financial advisors (IFAs).     Advisers need to conduct a fact-find on each customer before they can give a suitable recommendation. 23 failed to carry this out to the expected standard and seven didn’t even ask about the researcher’s income. Equity release (http://www.which.co.uk/advice/equity-release-explained/i ... ) has several risks that should be flagged up.  Some advisers didn’t mention how quickly the debt would grow or discuss the effect of compound interest.  One IFA said there was no chance of using up all the equity in the ‘customer’s’ home ‘unless you live to 150’. Which? was also disappointed that almost half of the advisers didn’t mention or dismissed out of hand home reversions, one of the two main types of equity release plans.   Some advisers were backwards in coming forwards about their fees too – instead of disclosing the details early on in the advice session, 13 advisers didn’t discuss this until later on and a further five didn’t mention them at all***.   Martyn Hocking, Editor, Which? magazine says: “If you’ve been hit by plunging pensions, it might be tempting to release some much-needed money using your home.  However, opting for an equity release plan is a big decision and it’s not one that should be taken lightly. “Which?’s investigation has uncovered some major flaws in the equity release advice process.  We’d like to see a tightening up of the advice process but, in the meantime, if you’re considering it, make sure you visit two or three suitably qualified independent advisers to be sure you’re making the best decision based on the options available to you.” Which? is the only organisation outside of the financial services industry to test the quality of financial advice in this way and has been reporting on it for over 20 years.  More information about getting the best advice on equity release is available (http://www.which.co.uk/advice/equity-release-explained/i ... ) - Ends - Notes to editors The full article “Equity release: Which? uncovers inadequate advice” appears in the August 2009 issue of Which? magazine.  For further information, the full article, a copy of the magazine or an interview, please contact Nicole Gross. *In April and May 2009, nine researchers went undercover to get advice from 40 advisors across the England, Scotland and Northern Ireland, posing under two different scenarios.  The researchers taped all the visits or phone calls, and the tapes were transcribed.  The transcriptions were then analysed to see how good the advice was. Which? benchmark: >   Give all the information and paperwork about their service and fees required of them by the Financial Services Authority (FSA) regulations >   Conduct a thorough fact-find of the researcher’s circumstances and determine why they thought they wanted an equity release scheme >   Talk through the different schemes available and the pros and cons of each; >   Talk through the alternatives to equity release, including downsizing >   Discuss the risks and make sure the researcher was comfortable with those risks >   Make a suitable recommendation, and explain why it met the researcher’s needs **Which? researchers visited 12 advisers from companies specialising in equity release. Two each from Key Retirement Solutions, Just Retirement, Aviva, Prudential and Age Partnership, and one each from In Retirement and Home & Capital.  They also visited 28 independent financial advisors (IFAs) who have the relevant equity release qualification. ***One later confirmed the fees in writing. Which? is the leading independent consumer champion in the UK. We provide impartial, expert information on products and services in our magazines, books and online to help consumers make more informed choices, and we campaign on issues that matter to all consumers, from food to finances, health to estate agents. For more information on how we can help you, visit http://www.which.co.uk

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