Spiders, pineapple on pizza, people that stand on the wrong side of the escalator – all of these things have a pretty bad reputation, but how does equity release land itself in this category?
Have you ever been off of work sick and found yourself mindlessly flicking through daytime TV? Of course you have, we've all been there, especially in these Covid times.
The one thing you will notice is that the adverts tend to be pretty repetitive: 'Have you started planning for your funeral?', 'Take out a payday loan', 'Donate to this charity', and we mustn’t forget 'Have you considered releasing equity from your home?'.
Equity release adverts are rife on our TVs, with various providers all pushing their own lifetime mortgage products.
But it doesn’t always go down well.
Take Key as an example. This month the Advertising Standards Agency censured an advert from the firm saying it risked exploiting some viewers’ concerns about their finances.
The ASA upheld a complaint made against the advert, which claimed it irresponsibly used fear about the potential of high mortgage rates to promote its product, and misleadingly implied that the equity release plan was comparable to a normal mortgage.
But Key hasn’t been the only one reprimanded recently.
A couple of months ago, the ASA banned a TV ad from Age Partnership after ruling that it was likely to mislead.
There is obviously a running theme here as it is no coincidence that providers keep being reprimanded for misleading customers.
So, is it that equity release is too complicated for people to understand, or is it that the advice and guidance on the product just is not good enough?
The FCA's view
Well, if you were to ask the Financial Conduct Authority they would say the latter.
The regulator said it was “disappointed” to find evidence of poor advice in the lifetime mortgage space as part of its review into later-life mortgage firms.
The regulator then said it will be intervening "robustly" with firms to ensure improvements are made.
It found advisers were not considering borrowers’ income and expenditure, not having enough discussion about alternatives and steering outcomes in favour of lifetime mortgage products.
Could it be that the consumer duty is the knight in shining armour the equity release market needed to boost its reputation?But when we asked advisers, most of them weren’t surprised to hear that the FCA had found this, which begs the question, why has it taken until now to do something about it?
Consumers are being bombarded with adverts and information about equity release and why it is a good idea, but when it comes to them getting advice to go ahead and release equity from their home, this is falling short.
And they don’t really have a choice in the matter as all firms offering equity release sales must be advised sales unless the customer meets the criteria required for an execution-only sale.
Consumer duty to the rescue
It seems like a catch-22 to me.
But in comes the consumer duty.
According to the FCA, the consumer duty means that lifetime mortgage advisers must communicate in a way which is clear, fair and not misleading, so that consumers can understand the product.
So does this mean we will be seeing even more of a crackdown on these misleading equity release adverts that plague our TVs?
It will also ensure consumers get appropriate information about the overall proposition; are made aware of the availability of alternative options; and make sure that advisers' recommendations are suitable, among other things.
So could it be that the consumer duty is the knight in shining armour the equity release market needed to boost its reputation?
It’s too early to tell right now as we are only two months in, but it seems promising.
For now, though, we can all keep an eye on those TV adverts and see if any noticeable changes are being made.
Amy Austin is news editor at FTAdviser
