Ship hits out at FSA’s outdated equity release stance

Andrea Rozario has attacked the FSA’s “outdated” stance on equity-release products, which she believes discourages providers and advisers from entering the market.

Ship director general Rozario is urging the FSA to reconsider its view that advising on equity release is riskier than other mortgage products. She says: “The reality is that if an adviser is offering equity release to their clients, they are much more likely to get a visit from the FSA because they are still viewed as high risk. The FSA’s argument seems to be the people who are most likely to use equity release – those between 55 and 80 – are vulnerable. That is an insult and the regulator needs to reconsider its stance.”

Rozario also disputes the claim made by some advisers that equity release should only be considered as a “last resort” for clients.

She says: “To label equity release as a last resort is irresponsible and inaccurate. The whole debate around equity release needs to be reframed, because at the moment it is plagued with unfair, negative connotations. Advisers have a moral obligation to take equity release into account when giving advice. A person’s property needs to be viewed as part and parcel of their assets when planning for retirement.”

Andrew Dilnot’s care reform recommendations, which propose introducing a £35,000 cap on the long-term care costs borne by individuals, could provide a welcome boon for equity release. But Rozario admits she was disappointed it did not lend its support to equity-release products. The report simply acknowledges that equity release “may be attractive for some people”.

Rozario says: “We welcome the Dilnot report’s key recommendations but we were disappointed he did not go further and support equity release as a legitimate solution to paying for care. I think the Government are scared of the potential negative headlines if it did come out and support people using the value in their homes to pay for their retirement.”

An FSA spokesman says: “Advisers should be basing recommendations for equity release on the suitability for a customer, taking full account of their individual circumstances. As long as advisers are compliant with the FSA handbook, then they have nothing to worry about.”