Simon Read: Who can you trust for decent advice?

Two-thirds of financial advisers have failed a "good advice" Which? test, the consumer body revealed this week. It sent its undercover investigators – posing as customers – to 40 advisers, 12 of whom were billed as equity release experts. Shockingly, only five of the experts passed the test, with just eight of the remaining 28 proving up to the mark.

If I was feeling uncharitable, I would say that it's a surprise as many as a third actually passed. But let's not use these results as a stick to beat financial advisers with – the industry does that itself with a constant stream of them rapped or fined by the City watchdog for rule-breaking or even fraud.

Indeed, just this week the Financial Services Authority has banned and fined two directors of a Yorkshire-based financial group for their misleading promotions and the mismanagement of an investment scheme that put 53 customers at serious risk of losing nearly £10m.

It banned an Essex mortgage broker for fraud the week before and, the week prior to that, an East London mortgage broker was made bankrupt for failing to pay a fine for mortgage fraud.

But let's presume – no matter how hard it may be to do so – that it's a surprise these financial advisers have been found wanting in the Which? survey. Instead, let's focus on the equity release issue.

The schemes are designed as ways for older people to get at the cash locked in their home. They get a largely bad press, chiefly because they are often promoted as being a way for people to get cash to enjoy their retirement when, in reality, they are best used as a last resort for older folk in financial difficulty. As such, they can be perfectly fine for some.

But – and here's the key – older people have a lot of options and anyone advising them about equity release should explore them. A failure to do so is a failure to give decent and fair advice.

In the Which? survey, more than half the advisers – 23 in fact – failed to conduct a simple "fact-find" on the customer. The fact-find can be a little tedious but, without it, an adviser can only guess at certain things. Worringly, seven advisers didn't even ask about the undercover researcher's income. Without knowing relevant facts, any advice is worthless.

This is particularly true when it comes to equity release, as it has several risks that should be flagged up. Some advisers didn't mention how quickly the debt would grow, or discuss the effect of compound interest. One even said there was no chance of using up all the equity in the customer's home "unless you live to 150". Clearly nonsense.

Which? has called for a tightening-up in the advice process, which I agree is a must. Andrea Rozario, director general of Safe Home Income Plans (SHIP), an organisation that represents equity release firms, concedes there are problems. "There are still improvements that could be made, and any advisers who are not confident in their skills should take action immediately," she says.

I'd go further and not allow anyone to advise on the issue until they can prove their competence and knowledge about the subject.