A review of the lifetime mortgages market has revealed that “misleading promotions” and “poor advice” is contributing to unfair and potentially damaging outcomes for consumers.
The Financial Conduct Authority (FCA) has laid bare its expectations on lifetime mortgage providers where it has found evidence of poor practice including
- Little investigation of income and expenditure
- Failing to provide sufficient detail of alternative options
- incentivising sales at the expense of good customer outcomes
Following its review in 2020 the FCA identified the lifetime mortgage market as an area to keep working with in its 2022/23 Business Plan. The new Consumer Duty requirements place consumer outcomes at the heart of its framework.
The review has prompted the removal or amendment of 400 misleading adverts which have fallen below the standards required and has said it has driven driven “significant improvements in processes to ensure advice is personalised and shows consideration of customers’ circumstances.” Its review has also identified opportunities to change the way advisors are incentivised.
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.”