Following the FSA’s mystery shopper initiative, which uncovered widespread failings in the advice given regarding lifetime mortgages, the regulator has announced that it will be looking at standards of selling practices from a number of individual firms.
The mystery shopping campaign revealed that of the 42 firms targeted in the lifetime mortgage bracket, 70 per cent of advisers did not gather enough relevant information about their customers to assess product suitability while 60 per cent of mystery shoppers pointed out that advisers had failed to highlight the downsides of equity release.
The FSA’s new timetable of action will seek to look at standards of selling practices and assess how improvements have been undertaken by identified firms. The regulatory body will also be engaging with trade bodies before the next phase of mystery shopping to provide guidance and assistance to members in the run-up to Spring.
The FSA has further stated that it will be ‘looking for senior management to ensure that their advisers are giving appropriate advice and dealing with the concerns identified.’
It also drew attention to the message that ‘borrowing to invest’ carries significant risks and that clients should be fully aware of the associated risks – a message not followed during the original mystery shopping campaign.
Tim Sturley, head of business development at Mortgage Express, said the time was right to look into the selling of lifetime mortgages and admitted that Mortgage Express would be looking into their lifetime coverage.
“It is in everyone’s interest to make sure they are following guidelines and we have issued advice through the Council of Mortgage Lenders to all our intermediaries,” he said.
