The FSA wants firms that only do a small amount of equity release business to either cease their activities or pass leads on to experts.
The unprecedented request forms part of the regulators mystery shopping results into the sector which show a slight improvement on last Mays disappointing findings into the lifetime mortgage market.
The announcement of the mystery shopping results was due to be made on Monday, but was delayed until next week, although the regulator was then forced to issue the results today after Money Marketing revealed the results, after a leak, in today’s issue of the paper.
Yet advisers have still been slammed by the FSA which says the sector has plenty of work to do to improve standards.
The FSA has found there are not enough systems and controls in place to protect the consumers from brokers doing small volumes of business
The regulator is still concerned that suitability is not being fully assessed and that advisers are not paying enough attention to eligibility for benefits and grants.
The results show firms gathering of information to get to know their customer is good in 55 per cent cases compared to only 30 per cent in last years sample. Some 56 per cent of firms are now advising on the down side of equity release compared to 40 per cent last year. One third are not giving out Initial Disclosure Documents, compared to 60 per cent last May.
FSA managing director of retail markets Clive Briault says: “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. The customers for lifetime mortgages are typically older and potentially vulnerable, so firms need to take particular care to ensure that suitable advice is given as a key element of treating customers fairly.
“There is no place in this market for firms that do not develop the necessary skills and do not implement appropriate systems to ensure that they give suitable advice. We expect firms to commit to delivering quality advice or to refer the business to firms that have done so.”