Equity release brokers Age Partnership have been told they won’t have to overhaul their television adverts despite claims they were misleading.
The Advertising Standards Authority received two complaints that a television advert for Age Partnership, seen on 12 March 2018, was misleading because onscreen text failed to reveal the interest rate people who opt for lifetime mortgages might have to pay.
Instead the advert just stated: "Fee of 1.95 per cent (minimum £1,395), only payable on completion. Equity released, plus accrued interest to be repaid upon death, or moving into long-term care.
"You only continue to own your home with a lifetime mortgage secured against your property. Equity release requires paying off any existing mortgage. Equity release will impact the size of your estate and entitlement to means tested benefits."
A spokesman for Age Partnership said as the business provided whole-of-market advice two types of equity release products were considered: home reversion plans and lifetime mortgages.
The spokesman said interest was not payable on home reversion plans but did accrue on a lifetime mortgage and would be payable when the individual died or moved into long-term care.
They said that a customer could also opt to make regular interest payments during the lifetime of the plan.
They said there were currently 374 individual equity release plans across the whole of the market and for those plans where interest was applicable (i.e. lifetime mortgages), each plan would have its own specific rate that could fluctuate daily.
Additionally, although most lifetime mortgages had interest rates that were fixed for life once the customer entered into the contract, the spokesman said.
Age Partnership pointed out some plans had variable rates which would change during the customer’s lifetime.
The spokesman for Age Partnership explained if they were to reference a specific interest rate on their television adverts they would have to take a 'typical' view, which would involve taking an average of the hundreds of lifetime mortgage plans available.
The rate could date instantly and would not be relevant for individuals suited to a home reversion plan, the equity release broker added.
The ASA rejected the complaint and ruled consumers would understand that the example shown in the advert promoted a lifetime mortgage, a common type of equity release scheme, and was only one type of the equity release products advised on by the broker.
A spokesman for the ASA said: "We considered that consumers would understand that the ad provided general information about how a lifetime mortgage worked, rather than referencing the specific terms of the product and was an illustration of the type of experience consumers may have when opting for a lifetime mortgage.
"We understood that a lifetime mortgage was a mortgage secured on a property, which allowed consumers to continue to own their home. Consumers would have the option to make repayments or let the interest accrue. The loan amount and any accrued interest would be paid back when the individual died or moved into long-term care.
"We noted that the on-screen text in the ad stated 'equity released, plus accrued interest to be repaid upon death', which indicated that interest had to be paid on the product, although a specific rate was not referenced in the ad.
"We considered that consumers would understand that interest rates for a lifetime mortgage would vary based on the plan provider chosen and an individual’s financial circumstances.
"Therefore, we concluded that the omission of an interest rate on a lifetime mortgage as featured in the ad was not misleading."
emma.hughes@ft.com
