Research by GE Life among 500 financial advisers – 56 per cent of which had advised on equity release in the past six months – revealed that although the sector is expected to triple it is vital that brokers and providers tread carefully to avoid equity release becoming the next mis-selling scandal.
Simon Little, product and marketing manager at GE Life, said: “Demand for equity rel-ease products will be driven by a number of factors. This includes demographic fundamentals, client needs and the savings gap – which could potentially reach £125 billion by 2009. More advisers are needed in this sector but we are urging both advisers and providers to take a responsible approach to equity release.”
More than half (55 per cent) of financial advisers are wary that equity release could become the next mis-selling scandal. When asked why, the two most common reasons were vulnerability of consumers and a lack of consumer understanding.
Of those who didn’t believe it would be the next mis-selling scandal, the three main reasons cited were strong knowledge among advisers, good products and good support from providers.
Financial advisers’ top three criteria when selecting an equity release product were SHIP membership (26 per cent), APR (20 per cent) and redemption penalties (15 per cent). 19 per cent said they would not advise on the product because it is too ‘high risk’.
Ray Boulger, senior technical manager at Charcol, agreed that the potential for the sector was large. He said: “It is up to the industry to educate advisers, raising standards and the perception of the sector.”
