The National Consumer Council has called on the Financial Services Authority to issue clear and stringent guidelines on training for IFAs who sell equity-release schemes.
The NCC says the complex schemes require expert advice and it wants training to be tightened up.
In its report, Equity Release, the NCC is also critical of the Government's decision to leave mortgage regulation to the Council of Mortgage Lenders' voluntary code of practice.
It says this means non-CML lenders new to the market could offer potentially risky products to elderly people.
The report says this is “a serious flaw” in regulation and calls for the FSA to regulate mortgages to protect consumers.
The FSA currently only regulates schemes linked to inv- estments while trade body the Safe Home Income Plans Group runs a voluntary code of practice for providers.
The NCC says the confused regulatory framework surrounding equity-release sch-emes provides “the worst of all worlds – partial regulation which restricts availability and hinders innovation without providing proper protection in return”.
It says it has found just one specialist adviser operating in the field – Hinton & Wild – and is concerned that no one publishes comparative data on the different types of plans available.
Risky home-income plans linked to investment bonds resulted in some of the worst financial scandals of the 1980s.
In a recent court case, Mr Justice Evans-Lombe ruled that nearly 200 elderly homeowners who were sold West Bromwich Building Society home-income plans by collapsed IFA Fisher Prew Smith should have their mortgage debts substantially reduced.
He said West Bromwich and Fisher Prew Smith were involved in a “joint enterprise” although WBBS maintains that responsibility for the sale of these products rests with the independent adviser.
The NCC says it believes equity release could offer significant benefits but regulation must first be tightened up.
The CML has this week arranged a conference for senior industry figures to discuss Hips, to be held at the Mayfair Conference Centre on April 8. The two key speakers are Bank of Scotland director of sales and products Willie Donald and Barclays mortgages sales and marketing director Jim Chadwick.