The FSA has today published damning research on the way consumers are being advised to buy equity release – also called lifetime mortgages – to release the value of their home in retirement, according to the Financial Services Consumer Panel.

The Panel asked the FSA to make investigation into equity release a priority area when it took over responsibility for mortgage regulation towards the end of 2004. The fact that the FSA found that, of their mystery shoppers, 95% were not asked if they needed to generate a stable income, and 78% were not asked about their state of health and life expectancy, is evidence that the Consumer Panel's concerns about the selling of these products were justified.

The Panel welcomes the FSA's use of mystery shopping to investigate the selling of equity release. We have been calling on the FSA for some time to use mystery shopping to check the real experience of how consumers are being sold financial products. Such stark results should encourage the FSA to test the consumer experience more in the future. The Panel will continue to press for them to do so.

Ann Foster , Chairman of the Consumer Panel said:

"Equity release is targeted at a particularly vulnerable group of consumers who are heavily dependent on receiving good advice – the consequences of receiving bad advice are far reaching and can lead to considerable problems in old age. These are damning results for those advising on equity release. We call on the FSA to take strong follow up action to make sure that they carry out their statutory duty to protect consumers of financial services in the area of equity release."

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