FCA review of later life mortgages revealed poor advice
November 22, 2023
Later Life Mortgages: Understanding the FCA Review
An FCA review of later life mortgage firms revealed that in many cases the advice did not meet the standards expected by the Regulator, particularly in respect of lifetime time mortgages and equity release.
The FCA also prompted the removal or amendment of almost 400 misleading promotions.
It said that despite clear and long-standing rules, the review had found ‘many’ inaccurate or misleading promotions. As well as product benefits being highlighted without any balancing description of the risks and firms using their FCA regulated status in a promotional manner.
Equity Release – Lifetime Mortgages
The review focused on the equity release market where complex products are sold to customers, who may face a higher risk of being in vulnerable circumstances.
Lifetime mortgages cater to those who want or need to use the value in their home to meet their later life needs. According to the FCA these are ‘overwhelmingly’ the most popular type of equity release product.
The FCA review examined firms responsible for around half of all lifetime mortgage sales.
The FCA said it was ‘disappointed’ to find evidence of firms not acting on its previous findings and had found many examples where intermediaries were:
- poorly considering borrowers’ income and expenditure
- minimising discussions around alternatives
- incentivising sales potentially at the expense of quality advice and good customer outcomes
- steering outcomes in favour of lifetime mortgage products
Sheldon Mills, Executive Director of Consumers and Competition, 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.’
The FCA said that as a result of its work all the firms included in the review have made changes to their sales and advice processes, including the way many incentivised their advisers.
What can you do if you received poor lifetime mortgage advice?
If you believe you were poorly advised regarding equity release or a lifetime mortgage the FCA says that you can make a complaint to the firm.
If you are dissatisfied with the firm’s response you should take your complaint to the Financial Ombudsman Service, within the specified time frame.