Stuart Wilson, marketing director at more 2 life, said a large number of new advisers are crossing over to later-life lending from the residential sector.
He said these advisers, who have not specialised in equity release, may be unaware of a range of product innovations that have been made during the past few years and as a result they are failing to recommend the best deal available.
The provider has found three out of four over-65 homeowners could potentially qualify for an enhanced loan-to-value based on assessment of their medical condition, yet only 15 to 20 per cent of customers actually received an enhanced plan according to a more 2 life estimate based on Age UK Later Life in the UK, the Department of Health National Diet and Nutrition Survey and ONS population data.
One of the main reasons for this was a survey of 100 advisers at the end of 2015 by the provider found that 22 admitted they did not routinely ask health questions when discussing equity release with clients.
Mr Wilson said he was concerned that other features, such as downsizing protection and inheritance protection, were also being overlooked.
Inheritance protection is a feature designed to ensure part of a property’s value is ringfenced so they can pass it on to the next generation – a key concern for many equity release borrowers.
Downsizing protection is designed to ensure clients do not incur any early repayment charges if they repay the loan as a result of selling their home and moving to a different property.
The warning about equity release mis-advice comes amid record growth in the equity release sector, as more and more older people look to access the wealth locked up in their homes.
The rise in popularity of equity release has led to a tripling of the product options over the past three years, with 78 now available - many of which contain new features designed to protect the consumer.
Mr Wilson said people who did not receive advice on these products could take their complaints to the Financial Ombudsman Service (Fos).
He said: “At the moment, the ombudsman is not finding in favour [of the complainant]. The point is these are complaints about loans five to 10 years ago, when downsizing protection did not exist.
