Equity release sales practices risk consumers being sold products they later “regret and misunderstand,” says the Financial Services Consumer Panel.

The 12-strong independent panel, which advises the Financial Conduct Authority, has asked the city watchdog to “support the development of holistic tools and guidance provided by independent bodies, such as the Money & Pensions Service, with the aim of helping people understand and narrow down a broad range of later life lending options”.

The panel says it had commissioned in-depth research to explore how vulnerable consumers are treated in the equity release market.

It says: “The findings indicated that the current sales and advice process does not always prevent consumers from experiencing poor outcomes, including regrets and misunderstandings about their purchase. The findings suggested that consumers who purchase from a position of vulnerability may fail to consider the long-term implications.”

Consumer Panel chair Wanda Goldwag says: “It is important that consumers, especially vulnerable consumers, are being offered products that suit their needs and are being offered appropriate tools and guidance to ensure they understand the options available to them.

“The panel’s work sets out where the FCA and industry can work together to build on improvements already made in this market. There’s work to do to consider the development of effective tools and guidance for later life lending, on whether the financial promotions regime is working as intended, and on meeting the higher expectations for consumer outcomes enshrined in the proposed new consumer duty.”

MorganAsh managing director Andrew Gething adds: “It is important to understand the consumer’s characteristics and vulnerabilities at the point of sale, to ensure that best advice is given and the transaction is appropriate.

“This raises the need for a systematic way to screen all applicants for products, as part of the advice process. Many in the industry are only looking at vulnerability when it is highlighted to them, from existing customers, whereas every customer really needs to be screened in this way and right at the start of the process.

He adds: “The flaw in the panel’s research is the limited sample size of only 45 interviews, comprised of people who were paid for their time, as this is not truly representative.

“However, the research remains valid and this calls for the industry to collate far better data on vulnerability and consumer outcomes.

“This means the systematic recording and objective assessments of consumer characteristics as well as outcomes, in order to provide reliable data for all parties and fundamentally ensure that the customer is always given the right advice and provided with the right product for their needs.”