On 14 September 2023, the FCA published the findings from its multi-firm review on later life mortgage advertising and advice.
The review focused on the equity release market, where complex products are sold to customers, particularly customers with a higher risk of being in vulnerable circumstances. Later life mortgages are the most popular type of equity release product, catering to homeowners who want to release money tied up in their homes to help meet later life needs. As such, the FCA notes that it is essential these consumers are fully informed and receive suitable advice that has taken account of their individual circumstances.
In this multi-firm work, the FCA reviewed the sales and advice processes, customer outcomes and financial promotions of intermediaries responsible for around half of all lifetime mortgage sales. Where it found that standards have fallen short, the FCA explains that it is intervening robustly with firms to ensure significant improvements in their advice processes. It also reminds firms that poor quality advice is unacceptable and that it will continue to review this market. Firms that are in breach of the FCA’s rules and do not meet its expectations should expect further regulatory focus and intervention.
The results include the following key findings:
- Despite clear and long-standing rules, the review found many misleading or inaccurate financial promotions, product benefits being highlighted without any balancing descriptions of the risks, and firms using their FCA regulated status in a promotional manner.
- In relation to suitability of advice, the FCA found many examples of intermediaries poorly considering borrowers’ income and expenditure, minimising discussions around alternatives, incentivising sales potentially at the expense of quality advice and good consumer outcomes, and steering outcomes in favour of lifetime mortgage products.
- As a result of the FCA’s work and subsequent interventions, all the firms included in this review have made changes to their sales and advice processes. The majority of firms also changed how they incentivise advisors.
- Also due to the FCA’s review, almost 400 financial promotions have been removed or amended where firms identified issues with them.
The FCA notes that it will also be considering its findings in conjunction with those of the retirement income advice review, which is currently ongoing.