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Bosses at equity release providers have often been sounded out about whether they want to set up advisory businesses.

The thrust of the argument was origination would be cheaper and more efficient if it was all done under the same roof.

Our response to queries of this nature is a simple and speedy refusal to even enter into any sort of discussion. We maintain Retirement Plus is a product provider and administrator of home reversion plans only.

But is this the right reaction? How should the situation be evaluated?

The answer to the second question should provide the answer to the first but, to start with, let us set the scene.

Members of Safe Home Income Plans do not have a common approach – far from it. Just a few recent examples of press comment show Bradford & Bingley is a product provider giving referrals to Just Retirement's advisory arm, which operates a limited panel.

Within the 20 members of Ship about half have the capacity to give advice in some form or another. However, most see the intermediary market as being the main source of new business.

Dual pricing concerns have not been an issue in the equity release market. In a far cry from the mainstream mortgage market the direct sellers of equity release, such as Prudential or In Retirement Services, tend to charge more for products that are sold through tied arms.

The situation is further complicated by the fact white labelling is common. Some product providers are actually arranging the plans of other product providers. Depending on the definition of white labelling used, seven or eight out of the 20 Ship members in June were actually involved in white labelling to some extent.

Mixing advice and product provision is still of concern to advisers as they are rightly worried about better capitalised companies chasing elusive leads and referrals. Within the mortgage market there are a number of large and powerful broking companies that are capable of matching a product provider's marketing spend.

By contrast, within equity release, there is only one such company. In addition while the product providers have a trade body – Ship – there is currently not really a trade body that exists for advisers.

So there must be concern the current trend within the Ship quarterly statistics for the share of intermediary business to rise and direct sell origination to fall is about to be reversed.

The underlying reason for this is product providers are finding it difficult to achieve the advance targets they have set themselves. This is partly because of the quiet market but also because of the power of online comparison websites.

As equity release is quite a complicated product with each provider having its own product nuances, the comparison websites have to keep the analysis tools relatively simple.

This has led to the main analysis being handled purely by interest rate and amount released. This, however, is highly inexact as other considerations such as whether further advances are properly guaranteed or the nature of early redemption charges may not get the prominence they deserve.

So a product provider may feel having a direct sales force or a brokerage with a limited panel is a way to achieve targeted levels of origination. The underlying question posed to us by industry observers was whether Retirement Plus wanted to have a greater degree of certainty of origination volumes. The answer to this is obviously yes – but at what cost?

The cost of setting up an advisory arm and feeding it leads is a substantial undertaking unless there is a natural customer base – from a back book for instance.

The savings on not having to pay out procuration fees on completed cases to advisers will be small in comparison to the fixed overheads necessary. In addition the advisory side brings a different set of FSA considerations.

Being a product provider and administrator has its own set of compliance rules, but they are light when contrasted with the regulatory impact of giving advice.

There is an additional cost though. Equity release is a developing market but it has suffered much criticism and negative media exposure, often with due cause. Ship and its code of conduct has assisted the market's rehabilitation.

But if the market lost an expanding whole of market advisory side, the positive publicity might go into reverse. I am not arguing against direct selling but I am arguing for the existence of an active and profitable adviser community.

Already there have been comments about direct sellers pushing up the cost of leads so advisers cannot compete. This does not stop advisers getting business from referrals and their own customer base.

But it does make it difficult for them to grow significant equity release business streams and without a flow of profitable cases there is no real future for the whole equity release market. That is a cost too far for Retirement Plus.

Duncan Young is chief executive of Retirement Plus