The Financial Conduct Authority has worked alongside later life mortgage providers to remove or amend nearly 400 misleading promotions. The work has been welcomed by the Equity Release Council.
The watchdog said its review of the sector, which looked at firms responsible for around half of all lifetime mortgage sales, has revealed that, in many cases, advice did not meet the standards expected. As an example, the FCA there was a lack of evidence that sufficient consideration of a consumer’s individual circumstances had been given and advice lacked discussion of alternatives.
Those firms found lacking have been called upon to improve the quality of their advice as part of the FCA’s drive to ensure advice is personalised and shows consideration of customer’s individual circumstances.
The majority of firms featured in the review also changed how their advisers are incentivised. Anyone who believes they were poorly advised can complain to the firm and if unhappy with the response, to the Financial Ombudsman Service, the FCA said.
Sheldon Mills, executive director of consumers and competition at the FCA, said: “Releasing money tied up in your home later in life is a big decision and can have a financial impact on consumers and their families well into the future.
“Our review led to the largest later life mortgage firms making improvements to their sales and advice practices and almost 400 promotions have been removed or amended where firms have identified issues with them. We expect all firms to assure themselves they comply with existing rules and guidance and higher standards under the Consumer Duty.”
Jim Boyd, CEO of the Equity Release Council, welcomed the FCA’s review.
He said: “We share the regulator’s commitment to putting customers first and ensuring they are fully informed and advised about their options. Its findings will inform our ongoing standards-setting work to help raise and reinforce best practice consistently across the sector.
“Modern equity release helps people to enjoy financial freedom and a better quality of life. Carefully considering the option of releasing equity, alongside all alternatives, should be part of every homeowner’s retirement planning.
“The Council and our members are undertaking significant work to reinforce advice standards and ensure clear customer communications. We wholeheartedly support the new Consumer Duty and will continue to work with the regulator, members and wider industry to take every opportunity to improve customer experiences.”
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