Poor advice and misleading promotions found by FCA in later life mortgage review

by The Technical Blogs


The City regulator has worked with later life mortgage firms to improve their advice processes and prompted the removal or amendment of nearly 400 misleading promotions.

The Financial Conduct Authority (FCA) said its review had found many inaccurate or misleading promotions, product benefits being highlighted without any balancing description of the risks, and firms using their FCA regulated status “in a promotional manner”.

Financial promotions can significantly influence consumers’ understanding of the later life lending market, and of the options they have available, the regulator said.

A later life mortgage is a type of equity release for homeowners who want to release money tied up in their homes to help meet their needs.

These complex products are often sold to customers with a higher risk of being in vulnerable circumstances so it is essential they are fully informed and receive suitable advice, the FCA said.

The FCA’s 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, the regulator said it had found a lack of evidence that sufficient consideration of consumers’ 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.

It is driving improvements to ensure advice is personalised and shows consideration of customers’ circumstances.

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.”

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The wide-ranging consumer duty was introduced over the summer to make sure financial firms put customers at the heart of what they do.

The majority of firms in scope of the later life mortgage review changed how their advisers are incentivised, the FCA said.

It added that 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 advisers must pay close attention to the review’s findings and act immediately where they need to, the regulator added.


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