One of the fundamental mantras of the financial services industry is to ‘know your customer’. However, a recent report by Which? shows there is still a lot to be desired within the industry. Which? recently conducted an undercover investigation into the advice given to elderly customers on equity release and have come up with some startling conclusions. The consumer group has found that two-thirds of advisers, who were mystery shopped, failed to give good advice to customers on equity release.

Which? reports that of the 40 advisers investigated only 17 undertook a comprehensive fact find to the expected standard. A fact find is an exercise where the adviser gathers a host of information about an individual, at the outset of the customer relationship, in order to ensure that a particular product suits the customers needs. This is good in theory, but in practise, as evidenced by this study, frequently fails to take place. This begs the question; if you don’t assess a customer’s needs properly how can you sell to them?

They also found that many advisers failed to accurately advise customers on the risks associated with equity release, including how quickly debt can accumulate or the impact of compound interest.

The report is an eye opener for many who are looking for sound unbiased advice in this area and certainly has a few learning points for consumers. Namely, it is important to do your own homework and seek advice from a number of tied and independent agents. Ensure that you use a number of different sources, from the internet to face-to-face meetings with advisers. And finally, do a ‘make sense’ check. If something doesn’t look or feel right – then it probably isn’t.