In a review of later life mortgage firms, the Financial Conduct Authority has worked with the largest firms to improve their advice processes and prompted the removal or amendment of almost 400 misleading promotions.
A later life mortgage is the most popular type of equity release catered to homeowners who want to release money tied up in their homes to help meet later life needs. These complex products are often sold to customers with a higher risk of being in vulnerable circumstances so it’s essential they are fully informed and receive suitable advice.
The review looked at firms responsible for around half of all lifetime mortgage sales. It found in many cases advice did not meet the standards expected. For example, a lack of evidence that sufficient consideration of consumer’s individual circumstances had been given and advice lacked discussion of alternatives.
The FCA has required those firms which fell short to improve the quality of their advice. The FCA is driving significant improvements in processes to ensure advice is personalised and shows consideration of customers’ circumstances.
The majority of firms in scope of the review also changed how their advisors are incentivised. Anyone who believes they were poorly advised can complain to the firm and, if they are dissatisfied with their response, to the Financial Ombudsman Service.
Other lifetime mortgage advisors must pay close attention to the review’s findings and act immediately where they need to.
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.’
