In its recently published review of later life lending, the Financial Conduct Authority (FCA) has raised concerns about the advice that some consumers received when signing up to equity release "lifetime" mortgages.
Following findings that some mortgage advisers were not always providing advice that was in the consumers’ best interests, the FCA confirmed that it would be stepping up its scrutiny of the equity release market. The FCA review highlighted that there had been a significant recent peak in taking up these mortgages.
Whilst accepting that many lifetime mortgages had worked well for those consumers who had received appropriate professional advice, the FCA added:
“Our focus for this market is on making sure consumers are fully informed and receive suitable advice that has taken account of their individual circumstances.”
“Deciding to take out equity release is one of the most important and long-term decisions consumers make in later life. The consequences of their decision are likely to have a significant impact on their financial wellbeing for the rest of their lives. This makes it particularly important that firms and their advisers get their advice right”.
The FCA review identified 3 significant areas of concern about the suitability of advice provided:
- Insufficient personalisation of advice
- Insufficient challenging of customer assumptions
- Lack of evidence to support the suitability of advice
COVID-19
+ −The FCA also points to growing anecdotal evidence that economic uncertainty created by Coronavirus was generating increased interest in equity release.
Rather than altering the review’s findings, the context of COVID – 19 “reinforces the importance of advice reflecting the needs and circumstances of the individual”.
Recovering Compensation
+ −For anyone concerned about the professional advice they received when signing up to equity release and now feels that this advice may not have been suitable and there may have been better, less costly, alternatives for them, the first step is to make a complaint to the lifetime mortgage adviser or their firm.
If the issue is not resolved, then the complaint can be escalated to the Financial Ombudsman Service (FOS), a Government-backed body that settles complaints and disputes between consumers and financial services businesses. FOS has the power to award compensation in appropriate cases. If matters cannot be resolved by the FOS process then the merits of Court action can be considered although strict time limits do apply.
TLW Solicitors’ view
+ −Commenting on the FCA’s equity release review, Peter McKenna, Partner and Head of the Financial Mis-Selling team at TLW Solicitors said:
“Unfortunately the FCA’s findings do not come as a huge surprise. In recent years there has been a large increase in the marketing of equity release products and as the FCA points out, a surge in the use of the products. We have seen a number of examples of people being advised to take out an equity release mortgage where there were much better options available to them and the advice given was totally inappropriate.”
Financial Mis-Selling Specialists
+ −Working on a ‘no-win-no-fee basis’, TLW’s experienced team can help you through the FOS complaints process. Our clients are reassured by our knowledge and experience of FOS procedures and, indeed, we have had FOS claims successfully upheld for clients whose claims had previously been refused on purely technical grounds.
TLW Solicitors Can Help
+ −If you are concerned about your, a friend or loved one’s equity release mortgage, please get in touch with TLW Solicitors by calling 0800 169 5925, emailing info@tlwsolicitors.co.uk or complete the call back form.
Time limits can apply and so anyone wishing to bring a claim should do so without delay.
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FCA conclusion:
“Poor quality advice in this market is unacceptable and is likely to create significant harm for customers who may be vulnerable.”
Financial Conduct Authority
