The regulator’s second review of the market, which comprised 75 mystery shops and visits to 23 firms, found that despite improvements in the sector, performance in the sector still varied significantly across the board.
The review found improvements made by larger product providers had led to better overall systems and controls that enable sales forces to give an acceptable quality of advice to consumers.
However, greater variation of standards among intermediaries was found. While firms specialising in the lifetime mortgage market were found to be meeting, or exceeding regulatory requirements, the review cited some standards as being unacceptable, particularly in cases where lifetime mortgages made up only a small part of a firm’s business.
The FSA listed a number of shortcomings in the market, which included; advisers failing to issue the Initial Disclosure Document (IDD) in a third of cases; failure to pay attention to cases where clients may have been eligible for means-tested benefits or grants and failure to explore in depth the impact of taking out a lifetime mortgage on their clients future options.
Clive Briault, managing director of retail markets at the FSA, said: “Welcome progress has been made by the industry over the past year. However, we remain concerned over the variable quality of advice provided in this market. Customers for lifetime mortgages are typically older and potentially vulnerable, so firms need to take care to ensure suitable advice is given.”
Richard Fox, chief executive at the Society of Mortgage Professionals, said specialist advice in the lifetime market was crucial. He said: “Lifetime mortgages are quite a complex area and we have always taken the view that giving advice in this area requires a very high level of sector knowledge, skill and relevant qualifications.”
