Which? principal researcher, Teresa Fritz, claimed a worrying level of advisers were falling short of expected standards when selling equity release products, and said that consumers needed to be made aware of the high get out fees and early redemption charges.
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She supported the FSA’s review of the sectors, focusing on high consumer risk products, such as non-conforming and equity release borrowing, which the regulator had previously found failings in.
In its initial study, the FSA raised concern over the amount of non-conforming packages available, and the amount of arrears covered.
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Dan Waters, director of retail policy at the FSA, said: “The findings of the review will help inform our thinking about how we might apply a more principles-based approach to our mortgage rules.” He announced his expectation that the second stage would be completed by December 2007, before the findings are published in 2008.
A spokesperson at BM Solutions welcomed the study. They said: “It’s not unexpected that the FSA is looking at non-conforming. BM Solutions is very happy with its quality of distribution and the vast majority of intermediaries give best advice. However, there is no room for complacency and the industry will no doubt move quickly to address any issues which may be raised by the FSA.”
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