The statistics from the ombudsman suggest that equity release makes up just 2% of complaints about home finance products, and very few are upheld.
But reading through them can be informative, and help both advisors and solicitors understand a little more about our roles and the impact on our clients.
The complaints often centre around the issue of capacity; an emotive subject which for me, highlights the critical importance of independent financial and legal advice.
As the saying goes, two heads are better than one, and this sensitive assessment, whether through the fact find, or using our own intuition and experience, is such an important part of making equity release a success for those involved.
A strong fact-find is informative; and clients should be encouraged by a thorough fact-find, understanding that it is the job of the financial advisor and latterly the lawyer to ask questions, probe the answers, articulate the legalities and document responses (critical!) to enable a recommendation based on the short, medium, and long-term situation and their personal circumstances.
So what can we learn about attitudes toward capacity from the ombudsman decisions?
1: Documentary evidence is absolutely critical and no corner must be cut.
2: There is a responsibility to question and probe to ensure the right recommendation and understanding.
3: Both financial advisors and lawyers should ensure we have clarified and documented that clients have the ability to read and digest the array of written documentation provided within the process.
4: Both financial advisors and lawyers must evidence that we remain steadfastly independent.
5: Capacity is an emotive subject we must take seriously, but also treat sensitively.
6: Both the advisor and the lawyer have a responsibility to assess capacity and report any concerns.
7: Hindsight is 20/20; any decision is made in view of the available information at the time, the onset of a capacity related illness like dementia after the event can often confuse the issue. The highlights the importance of evidencing capacity at the time.
8: In some cases, the consistency of information and documentary evidence from both the advisor and the solicitor attests to capacity.
9: We must be vigilant to when it is appropriate to consider an independent mental capacity assessment.
10: The complex nature of equity release demands specialist, independent legal advice.
Clearly, the importance of documented evidence is critical in every case, and none more so than when it comes to capacity.
And to some extent, I think one of the unwritten responsibilities is a commitment to doing not just what is required from a regulatory point of view, but actually going that step further and doing what is right from a client welfare point of view.
