The Advertising Standards Authority (ASA) has banned a television advertisement for an equity release scheme on the grounds that it was “misleading”.
The advertisement in question, for an equity release scheme from Age Partnership Ltd, featured an older couple who stated: “We began to worry about our finances, especially with living costs going up all the time. We had thought about releasing money from our home, so we visited the Age Partnership website.
“We were delighted to find out any money we released would be tax-free. And more importantly, we'd continue to own our own home. We used some money to pay off our mortgage and with no monthly repayments we now have a rainy day fund, to top up our retirement income.”
On-screen text stated, “You only continue to own your home with a lifetime mortgage secured against your property,” and, “Equity Release will impact the size of your estate and it could affect your entitlement to means-tested benefits.”
Nine viewers, who understood that customers would have to take out a mortgage in order to release equity on their property, complained to the ASA after the advertisement was broadcast in February of this year. They objected to the claim “we used some money to pay off our mortgage” and, on this basis, questioned whether the advertisement was misleading.
Age Partnership Ltd stated in its response to the ASA that an equity release plan was a distinguishably different product from a traditional mortgage. It could only be taken out by people over the age of 55, did not require monthly repayments and the debt was repaid when the person died, or moved into long-term care.
Age Partnership therefore considered that it was incorrect to view an equity release plan as one mortgage replacing another. It stated that equity release was one financial solution that could be used to replace a mortgage.
It further stated that it was a requirement when taking out an equity release plan that any existing mortgage or other secured lending was fully paid off. It stated it had specifically highlighted this in the advertisement, which expressly stated “we used some money to pay off our mortgage”.
Age Partnership pointed out that the on-screen text stated “You only continue to own your home with a lifetime mortgage secured against your property” and considered that this made it clear that it was only with a lifetime mortgage that full homeownership was retained. It added that this wording was also intended to highlight the fact the advertisement was referencing a form of secured lending.
The ASA upheld the complaint against the advertisement. It said it understood that it was promoting a lifetime mortgage, a common type of equity release scheme (and the only one that allowed the customer to continue to own their own home).
It said it also noted that, to qualify, consumers had to be over 55 and own their own home outright. It understood lifetime mortgage schemes generally removed the requirement for consumers to make ongoing monthly payments, and that the money borrowed would instead be recouped at a later date; for example, from the sale of the property or from the estate after death.
The ASA said it considered that the average consumer watching the advertisement would understand that equity release involved borrowing money against the value of their home. However, it also noted that the advertisement did not specify how repayment was to be made, beyond indicating that there were “no monthly repayments”.
It considered the repayment commitment and the circumstances in which the lifetime mortgage was likely to be paid back would not be clear to the average consumer, and was material information they needed to know.
It said it understood, too, that the claim “We used some money to pay off our mortgage” was intended to indicate that a mortgage had to be paid off before viewers could take up the product. However, it considered it was unclear how the couple in the advertisement, who were concerned about their finances, had paid off their mortgage and whether, for example, they used the equity scheme for that purpose.
Moreover, the ASA said, it was not clear that paying off their previous mortgage was a requirement of equity release, as opposed to a choice the couple in the advertisement had made voluntarily.
In light of the above, it considered that the advertisement did not sufficiently, clearly communicate relevant information and detail about how and when a lifetime mortgage was likely to be repaid, and whether or not the scheme could be taken up by those with outstanding payments on their existing mortgage.
Because the advertisement focused on the potential benefits of a lifetime mortgage without sufficiently communicating those other elements, the ASA considered it to be ambiguous and likely to cause consumers to make further enquiries regarding those products when they would not otherwise have done so.
It therefore concluded that the advertisement was misleading and must not be broadcast again in its current form.
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