The Financial Conduct Authority (FCA) has reviewed the later life lending market and worked with the largest firms to improve their advice processes.
This has prompted the removal or amendment of almost 400 misleading promotions.
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 says it 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, the regulator 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, added: “We support the FCA’s engagement with the lifetime mortgage sector, which helps tens of thousands of customers each year to enjoy better standards of living.
“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.”