Which? researchers visited 40 advisers, including 28 IFAs as well as equity-release specialists and advisers attached to equity-release providers.
It found that 27 failed to meet all the six benchmarks set out to measure good advice. Of the IFAs that made up the sample, eight out of 28 met the benchmarks, with the remainder falling short.
Of the 12 advisers Which? classes as equity-release specialists, which include firms such as Key Retirement Solutions, Just Retirement, Aviva, Prudential and Age Partnership, In Retirement and Home & Capital, only five passed the test.
It found that overall 23 advisers failed to carry out a fact-find and seven failed to ask about income. Some advisers failed to mention how quickly the debt would grow or discuss the effect of compound interest. Almost half of the advisers dismissed home-reversion products.
Which? editor Martyn Hocking says: “Our investigation has uncovered major flaws in the equity-release advice process.”
Key Retirement Solutions group director Dean Mirfin says: “This is very disappointing. It is time that we stopped defending the sector. If there are people not doing the job as they should, this will hopefully make them take a long, hard look at their proposition and consider leaving equity release.”
Safe Homes Income Plans director general Andrea Rozario says: “Although over 7,000 people have taken equity-release exams, the fact that Which? has found issues with the processes of some of the 40 advisers reviewed shows there is no room for complacency.”