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Equity-release boom poses sale problems

Equity release could become the next big misselling scandal if IFAs do not take due care, warns GE Life.

The firm predicts that the equity-release market could triple over the next five years following demand driven by demographics, client needs and the savings gap – which could reach 125bn by 2009 according to the Turner report.

But GE Life says sales processes must be watertight if advisers are to avoid missell- ing claims.

Following research of 500 financial advisers, 55 per cent say they are wary of equity release becoming a misselling scandal, citing vulnerability of consumers and a lack of consumer understanding.

Many advisers are uncomfortable about recommending the product, with 19 per cent saying the product is too high risk.

Product and marketing manager Simon Little says: “It is estimated that over the next 25 years the number of people of pensionable age will grow by nearly 50 per cent to 15 million. These people will need additional capital or income in retirement.

“As the results of our research show, it is vital that the selling process on equity release becomes watertight to avoid another misselling nightmare.

“We are urging advisers and providers to take a respons- ible approach to equity rel- ease by taking a more joi- ned-up approach.”

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