Today rather than the Witchfinder General seeking out those who ‘consort with the devil’ advisers are faced with trial by the media – often based on very little evidence and out of date understanding.
Equity release advisers have not been immune from a bit of gentle ‘scorching’, particularly from Which? recently. It has suggested that the preliminary findings of its ongoing ‘mystery shop’ exercise into equity release has already uncovered advisers undertaking ‘inadequate fact finds’, having ‘very little discussion about the risks involved’ and ‘advisers have also been anti-home reversions, choosing instead to steer Which?’s mystery shoppers to lifetime mortgage products’.
This perhaps should come as no surprise. Which? after all has never been particularly enamored with the equity release sector and regularly ‘warns’ the public about the ‘dangers’ involved in the sector. While it is important that a sector such as equity release is open and transparent, and willing to accept such scrutiny, one often wishes that those ‘reviewing’ the sector showed slightly more knowledge of recent developments and product changes, as opposed to relying on perceptions that were out of date five even ten years ago.
The main point is that good equity release advisers should not be perturbed by these continued accusations, although they clearly impact on the industry’s ability to change archaic attitudes and make all our jobs that much more difficult. Instead advisers should be able deal with mystery shoppers with something slightly more tangible than a lucky horseshoe – indeed, by simply sticking to the correct processes all customers, mystery or otherwise, should go home happy.
A good example of this is having a bespoke equity release factfind – one that asks the right questions to capture all the soft facts that dictate the ultimate product recommendation. For example, does it cover off questions such as:
• What would you like to happen to your estate when you die?
• What’s your view on future house prices?
• What’s the outlook for your health in the short, medium and long term?
As far as pointing out the potential risks associated with equity release some advisers we have spoken to as part of our Bridgewater Breakfast Forums have said they give the customer a copy of the FSA ‘Money made clear’ booklet on equity release and talk the customer through the key points within it. This should help ‘de-risk’ the sale for the adviser by ensuring all the key points are covered but also reassures the customer that the adviser is open and transparent.
As for some of the alleged product bias alluded to by Which?, the best way an adviser can avoid any accusation is not to give an opinion on the relative merits of either a lifetime mortgage or a home reversion until all the customer’s soft facts have been gathered and a recommendation is ready to be made. This may not be until the second or third client meeting, however, it will mean the adviser is in possession of all the facts and they will have a strong understanding of the major drivers the client has.
Organisations such as Which? are clearly positive in their intention to stop consumers, for example, purchasing products which are faulty or taking advice which is not right for them. Mystery shopping can be of benefit but the shoppers themselves must be informed and educated about the areas they are covering and have a strong grasp of the FSA regulations and rules advisers now have to follow. Which? must not forget that equity release is a regulated sector – advisers have to comply with the rules and consumers have much greater protection rights than pre-regulation.
Equity release advisers should follow the rules and processes laid down in the regulations, while they must also ensure their service is entirely customer-focused. By providing fully transparent and open advice, and handling equity release as a sector requiring a specialist approach, advisers can make sure they are not faced with the media equivalent of being thrown into a lake any time soon.
Peter Welch is head of sales and distribution at Bridgewater Equity Release