Advisers are becoming wary of the market for equity release and are starting to pull out and refer to other firms, according to Key Retirement Solutions.
KRS managing director Colin Taylor says more IFAs and mortgage brokers are deciding not to bother with equity release because of concerns about the risks involved, preferring to stick to mainstream mortgages.
KRS's equity-release referral system, Key Partnerships, has recently seen a surge of interest from firms unwilling to advise on equity-release business. It has just signed up two new firms, Lifelink and Ernest R Shaw, which have around 150 registered individuals between them, which will refer their equity-release clients to KRS.
The market for lifetime mortgages will be regulated by the FSA from October 31 and the regulator recently said the area could be the next misselling scandal.
FSA managing director of retail markets Clive Briault told a Labour Conference fringe meeting in Brighton last month that the misselling of products which allow people to release value from their property in retirement – equity release – is a particular concern.
Taylor says: “An awful lot of companies are pulling out of the market as they are worried about it. With lifetime mortgages having different rules to mainstream mortgages after M-Day, firms are looking to KRS to provide an efficient solution.”