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FCA equity release probe will get rid of ‘bad apples’

FCA equity release probe will get rid of ‘bad apples’

The Financial Conduct Authority’s latest probe into the equity release sector will get rid of some “bad apples”, according to an adviser.

Speaking on FTAdviser’s latest podcast, Fairview Financial adviser Laura Healy said the City regulator’s recent announcement it could be looking into adviser practices across the equity release sector once again can only be a good thing.

In response to the potential impact of the review, Healy said: “Probably getting rid of some bad apples, I would say.”

Healy, who is a qualified mortgage and equity release adviser, said consumers do still need protecting.

“There’s a lot of clients out there that don’t know enough about equity release and it’s our job to go out and make sure they’re aware of everything - the pitfalls, the benefits - everything.”

In April, the FCA warned advisers it needs to look again at the equity release market to make sure it is working in the best interests of consumers.

It said it was mulling over whether it needs to follow up on earlier findings concerning poor quality advice and checking that standards among intermediaries giving advice have improved.

In 2020, the FCA sounded alarm bells over unsuitable equity release advice after a review found some mortgage advisers were falling short in the market.

The equity release industry has had to work to improve its reputation, which took a knock in the 1980s and 1990s amid a number of scandals, leaving people with large amounts of debt.

Knight Frank Finance’s later life finance head, David Forsdyke, also joined FTAdviser’s podcast.

He said: “I think the FCA having another look at equity release can only be a good thing. We’ve got a fantastic set of rules set by the Equity Release Council. If everybody is following these rules and doing what they should be doing, consumers are well-protected and well looked after.

“The FCA coming in and looking at that will either confirm that we’re all doing a good job and looking after consumers…If the FCA does unearth some concerns, again I can only see that as a positive because that helps us as an industry to take stock of where we are.”

This comes as the Financial Services Consumer Panel published research earlier this month (May 5), in which it made the case for development of tools and better guidance for later life lending, including equity release.

To listen to the full podcast, click on the link above.

ruby.hinchliffe@ft.com