Like many equity release advisers, I have been anticipating the findings from the Financial Conduct Authority review since the regulator fired a warning shot at the industry at the end of last year.
The FCA’s overarching findings of its review, published last month, were:
- Insufficient personalisation of advice.
- Insufficient challenging of customer assumptions.
- Lack of evidence to support the suitability of advice.
It is no surprise there are things that need to be addressed when the industry has grown at such a rapid rate over a relatively short period of time.
There must be a lot of advisers out there who have not kept up with the fast pace required to maintain a high standard of advice.
Similarly, advisers new to equity release may not have anticipated the level of investment, knowledge, training and compliance that the sector calls for.
- The FCA made some important points around advice on equity release
- Having access to a wide range of equity release plans is important
- Using equity release to consolidate debts should only be done when appropriate
I welcome the review. We, as advisers, should be delivering client-led advice. But let us be clear that advice needs to be just that: advice. Not the client leading the process by asking for a sum of money without justification.
We should all be looking at each client’s needs on an individual basis and advising them on the product that is best suited for their circumstances, whether that is a mortgage, pension income product or downsizing. This holistic product view is the key to providing sound advice.
If equity release is the right solution for a client, then it is our duty to find the best plan for that client’s individual situation.
Having access to plans from across the whole of the market is the surefire way to do this. If you are tied to a panel, or even one lender, can you put your hand on your heart and say that you can find the best solution for your clients?
The requirement to have a record of the advice given to clients, whether that is over the phone or via face-to-face meetings was highlighted by the FCA. At Age Partnership we have chosen to take this a step further: we have audio recordings of all client interactions regardless of where that interaction takes place.
When you drill down into some of the FCA’s findings there are a few points that I think it is important to look at and discuss in more detail.
- Advisers recommending changes to property ownership.
We have to understand that the ramifications of changing property ownership are huge, and I would hope that advisers are fully aware of the potential impact.
At Age Partnership our internal guidance is clear: we must not actively promote or recommend changes to property deeds during the advice process.