If they are going to go ahead with this, and in their 60's they are not likely to get any other type of Mortgage, ensure they use a Company that is a member of SHIP the regulatory body. This would ensure that they are never left with negative equity.
If they are already so much in debt at retirement age they are in great risk of the debt spiralling out of control if they cannot keep on top of it, is there any way that your sister and you can clear the debts in view of the fact that you will both inherit the house.
Did the Adviser say anything about being able to get the equity release with the house being in a Trust and your parents effectively only owning 50%, as this may cause problems with the amount they would be able to release if any.
By the way, if either of your parents need future care, the house could not be touched while the other parent still lives there. If the second parent then needed care, and it was deemed that they had deprived themselves of assets to avoid fees, the house could still be claimed as if they still had full ownership.