Telephone equity release providers hit out at calls for their services to be banned

News - Funds

Written by Ray Clancy

Wednesday, 03 February 2010 09:17

The Society of Equity Release Advisers wants to ban telephone-based equity release advice as face to face meetings are the only way of checking consumers’ are mentally fit enough to make the decision and understand the risks.

But those involved in this aspect of the industry hit out at the demand and said that checks including recording telephone calls, offer sufficient protection for consumers.

In its response to the Financial Services Authority’s Mortgage Market Review, SERA says it is concerned that telephone sales for equity release can force home owners to take out a plan under duress.

The equity release adviser trade body also calls for changes to equity release permissions to boost consumer protection and for firms to be required to hold joint permissions for home reversions and lifetime mortgages in order to advise on equity release, so that both products can be offered to clients.

‘We concur with the FSA’s proposals in the main but remain concerned that equity release continues to be seen as a mortgage sale and hasn’t been recognised as a wholly different proposition, sharing more common features with financial planning products,’ said Simon Chalk, chairman of SERA.

‘Less than two pages of the 118 page Discussion Paper are devoted to equity release. We urge the FSA to engage with us in order to improve standards of advice, ensuring better consumer protection,’ he added.

But not all in the industry agrees. Telephone-based equity release adviser, Age Partnership argues there is a place for both over-the-phone and face-to-face advice. It claims customer choice is paramount and the number of plans arranged over the telephone has actually increased as the size of the equity release industry has decreased.

‘These comments are ill-informed and appear to be made from a position of self-interest. He (Chalk) clearly does not understand the benefits of the telephone-based model, enabling, among other things, every conversation between adviser and client to be recorded and scrutinised for training and compliance purposes,’ said Tim Loy, chief executive of Age Partnership.

‘The important thing is that, whatever model is used, advisers should ensure they have the appropriate systems and training in place to deliver the client clear, independent and honest advice,’ Loy added.

Peter Welch, head of sales and distribution at Bridgewater Equity Release, also said that choice is important. ‘Increasingly people only want to do business through the channel of their choice of which the phone is one. Firms giving telephone equity release advice should have the appropriate systems and controls in place, such as call recording and call monitoring. With this level of customer protection there should be no difference in the advice customers receive compared to any other channel,’ he explained.

And Clare Barker, chairman of the Equity Release Solicitors Alliance, pointed out that the requirement for home owners to obtain legal advice before entering into contracts meant most homeowners will be seen in person at this stage, providing security for advisers selling products over the telephone.