David Prosser: More mortgage misery

Outlook Wondering where the next financial services scandal might come from? Look no further than the equity release market, where the consumer group Which? is reporting that standards of advice are not good enough.

This specialised niche of the mortgage market – where older homeowners release cash from their properties, often to supplement meagre retirement incomes – has been a target for some unscrupulous individuals for the best part of 20 years, though in recent times a limited number of more respectable companies have also entered the market.

Regulation of the sector is supposed to have been tightened over the past few years, but research by Which?, consisting of a mystery-shopping exercise, suggests that many mortgage advisers are not doing a thorough job before selling equity release plans.

That could prove to be a disaster. With stock markets having failed to produce the goods over the past five years, more and more people are retiring on lower incomes than they had hoped for (not to mention those who have never been able to save adequately for old age).

Add in the ever-increasing number of people who need expensive long-term care in retirement, and the demand for equity release products is likely to rise sharply in the years ahead. It's hardly an area where you want to see cowboy advisers operating.