Over the past two decades, equity release has moved from a niche product with a chequered history to a far more mainstream retirement planning option.

Equity release lending has ballooned from just £804m 10 years ago to nearly £4bn last year, while the number of borrowers using the product more than doubled over the same period from 17,584 to 44,870, according to Equity Release Council figures.

Stronger consumer protections, greater product choice and flexible features have all contributed to the huge growth in popularity of lifetime mortgages.

The demise of final salary pensions and the cumulative impact of decades of house price growth are also fuelling demand, as older home owners increasingly find themselves equity rich and cash poor.

But perhaps the biggest factors driving the market forward have been intense competition and record low interest rates.

The cheapest deals are now just over 2.5 per cent – bringing the products closer than ever to mainstream mortgage pricing.

Just four years ago, when average rates were more than 6 per cent, a debt of £150,000 would have doubled in less than 12 years, but at today’s best buy rates it would take just over 28 years to double – a shift which has completely transformed the appeal of equity release as a proposition for ordinary borrowers.

Unfortunately, though, for those involved in the sector, the FCA’s latest findings made for uncomfortable reading.

The watchdog found that some firms were not paying enough attention to borrowers’ individual circumstances and whether equity release was the most suitable option before recommending the products.

Just as the industry seemed to be finally shaking off the spectre of disastrous shared appreciation mortgages sold in the 1990s, this new reputational setback will be disappointing to those trying to professionalise the sector.

Ash Ridge director Jane King believes that the equity release market has made huge progress in developing customer-centric features such as deals where early repayment charges end after the first 10 years and products with downsizing protection. However, there are still aspects of the industry that she finds concerning. “I think an awful lot of people are being sold to, rather than being properly advised on all their options.

“There are a lot of advisers charging hefty fees of £1,000 on top of the higher commission that they will earn from equity release plans, which pay around 2.5 per cent compared to about 0.35 per cent on standard mortgages.

“I worry that more and more advisers are doing the exams because they think it is a good way to earn a bit more money.

“If we are not careful the sector will be tarnished with the reputation it had previously where it was associated with pushy salesmen going into people’s homes and trying to flog them something. That would be a shame when the products have improved so much.”

Your Mortgage Decisions director Martin Wade believes that, while equity release lending has followed a steep trajectory to date, the sector is still a long way from fulfilling its growth potential and fully overcoming its image problem. In 2018, realising the importance property wealth could play in the future financial wellbeing of generations of older homeowners, Wade’s firm launched a dedicated later life advice arm, Access Equity Release.

He says: “The innovation and availability of products has been revolutionary over the last few years, while the awareness among mortgage advisers has also increased significantly.

“Unfortunately, the message still does not get through to the end consumer and there remains an enormous block in people’s minds.

“We are saddled with low understanding and negative perceptions from 10 or 20 years ago, which much mainstream consumer media coverage does little to change.”

Despite this, Wade believes that equity release is here to stay as a key component in the retirement planning toolkit.

“The inescapable fact is that property is now seen as an asset class and as such has a role to play in accumulating value and security.

“Soaring living costs have meant many people have not had the financial capacity to invest what was required into long term planning for retirement. “The value tied up in our bricks and mortar can be accessed more flexibly than ever before.

“With detailed, independent advice we can help the older generation to make the decisions that are right both for them today, and for their family in the future.

“Getting all mortgage advisers qualified in equity release must be a first step to merging the lending markets together and enabling holistic advice across mortgages, retirement interest-only and later life lending.”

Equity Release Council chair Chris Pond says it is vital that the sector takes on board the criticisms raised by the FCA and feels that learning from such mistakes is how an industry matures and develops.

He says: “The FCA were quite right to flag up shortcomings and as a council we take those findings seriously.”

Pond believes that many of the points raised have been addressed by the Council in its recently-expanded adviser checklist.

He says the combination of statutory regulation provided by the FCA and self-regulation by the Council will result in the best outcomes for borrowers. Indeed, there were just 38 complaints to the Financial Ombudsman Service about lifetime mortgages last year, of which two were upheld.

Pond says: “Statutory regulation provides consumer protection, but if you want to build trust with customers, voluntary self-regulation is necessary, and arguably more effective. A firm that voluntarily signs up to a set of standards will give customers a greater sense of confidence in the service they provide.”