Two thirds of financial advisers failed to pass all of Which?’s benchmarks for equity release advice in a recent set of Which? mystery shops.

The consumer watchdog's researchers visited 40 advisers and found that only a third of them met all its benchmarks for good advice.

Overall, five out of 12 equity release specialists passed the Which? test. It also found that eight of 28 financial advisers met the Which? benchmark also.

It says 23 advisers tested failed to carry a fact-find and seven didn’t even ask about the researcher’s income. Some advisers didn’t mention how quickly the debt would grow or discuss the effect of compound interest. One IFA said there was no chance of using up all the equity in the customer’s’ home “unless you live to 150”.

Which? editor Martyn Hocking says: “Which?’s investigation has uncovered some major flaws in the equity release advice process. We’d like to see a tightening up of the advice process.”

The equity release body, Safe Homes Income Plans warns that people have to remember what has been excluded from Which?'s as well as what has been included.

Director general Andrea Rozario says: “Although there are estimated to be over 7000 people who have taken the specialist equity release exams, the fact that Which? has found issues with the processes of some of the 40 advisers reviewed shows there is absolutely no room for complacency."

If you are considering using your home's equity as means to fund your retirement, make sure your adviser is fully qualified, has customer testimonies and can prove that they are asking all the right questions when it comes to good equity release advice.

SOURCE: Which?, SHIP, 23/07/09

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