Almost 400 misleading promotions concerning later life mortgages have been removed or amended following a review by the Financial Conduct Authority (FCA).

The regulator has been working with the UK’s largest later life mortgage firms to improve their advice processes.

A later life mortgage is the most popular type of equity release catered to homeowners who want to release wealth tied up in their homes to help meet later life needs. Such products are often sold to customers with a higher risk of being in vulnerable circumstances, and the FCA has highlighted the importance of these customers receiving informed suitable advice.

The review, which considered firms responsible for around half of all lifetime mortgage sales, found that in “many cases”, advice had not met the standards expected. The FCA is now requiring any firms that fell short to improve the quality of their advice. It also driving significant improvements in processes to ensure advice is personalised and shows consideration of customers’ circumstances.

Executive director of consumers and competition, Sheldon Mills, 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.”

Most firms in scope of the review changed how their advisers are incentivised, and the FCA suggested that anyone who believes they were poorly advised can complain to the firm. If they are dissatisfied with their response, customers can also approach the Financial Ombudsman Service.

The regulator has also invited other lifetime mortgage advisers to pay “close attention” to the review’s findings and act immediately where they need to.

Responding to the FCA’s review, CEO of the Equity Release Council, Jim Boyd, said: “We support the FCA’s engagement with the lifetime mortgage sector, which helps tens of thousands of customers each year to enjoy better standards of living.

“We share the regulator’s commitment to putting customers first and ensuring they are fully informed and advised about their options. Its findings will inform our ongoing standards-setting work to help raise and reinforce best practice consistently across the sector.

“Modern equity release helps people to enjoy financial freedom and a better quality of life. Carefully considering the option of releasing equity, alongside all alternatives, should be part of every homeowner’s retirement planning.”

CEO and founder of LiveMore, Leon Diamond, also welcomed the report into the lifetime mortgage sector, and added: “The effect of compound interest on a lifetime mortgage is significant, especially in a high interest rate environment, making this form of finance expensive if a mortgage is held for many years. So, if a standard mortgage is affordable, that is usually the best outcome for the customer and there is an easy way to find that out.

“We are firmly of the view that an affordability assessment should be undertaken, in all cases, before any decision is made about going down the route of a lifetime mortgage.

“A fundamental part of an adviser’s role is to fully understand the income and outgoings of customers.”

Diamond added: “Anything that improves the industry for the good of the consumer can only be a good thing and this report from the FCA is a strong reminder for every broker and lender to put the customer first.”

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