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‘Low-volume firms shouldn’t sell release’

The FSA is asking firms that only do a small amount of equity-release business either to stop selling the product or to pass leads onto experts.

The unprecedented request forms part of the regulator’s mystery-shopping results into the sector, leaked to Money Marketing, which show a slight improvement on last May’s disappointing findings into the lifetime mortgage market.

But the FSA says standards remain unacceptably low and it is ordering firms in the sector to improve.

The FSA found that brokers doing small volumes of business do not have sufficient systems and controls in place to protect consumers.

The regulator is also concerned that suitability is still not being fully assessed and that advisers are not paying enough attention to eligib- ility for benefits and grants.

The announcement of the mystery-shopping results was due to be made earlier this week but was delayed and a date for publication has not been set.

The results show that firms’ gathering of information to get to know their customer is now good in 55 per cent cases compared with only 30 per cent in last year’s sample and 56 per cent of firms are advising on the downside of equity release compared with 40 per cent last year. One-third are not giving out initial disclosure documents compared with 60 per cent last May.

The FSA’s leaked comments state that it “remains unconvinced by a number of aspects of advice” and that “standards are unacceptably low”.

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