Firms must do more to ensure that they are always giving appropriate equity release advice, a new FCA review is suggesting.

The regulator noted later life lending has grown in recent years and that equity release is working well for “many consumers”, but highlighted areas of concern that it believes could increase the risk of harm to them.

Undertaken by the FCA as part of exploratory work on later life lending, the review considered the borrowing opportunities available to consumers aged 55 and over, some of whom may be more vulnerable.

The FCA suggested that advice given by firms did not always sufficiently take into account consumers’ personal circumstances, and that consumers’ reasons for looking at equity release were not always challenged by firms.

In its review, the regulator also expressed concern that the advice given to take out equity release products could not always be shown to be in the best interests of all consumers.

FCA executive director of supervision, retail and authorisations, Jonathan Davidson, said:
“Deciding to enter into a lifetime mortgage is a big decision with a big financial impact for consumers. In many instances it makes sense but whether it does or not depends on personal circumstances and how they might change.

“It is therefore critical that advice offered to consumers looking at lifetime mortgages is suitable to their personal circumstances. It is clear from our review that advice being offered to such consumers, including some vulnerable consumers, is still not up to scratch.

“All firms offering these products should read our review and take action to make sure consumers are receiving advice tailored to their personal circumstances.

“We’ve continued to engage with firms where we had concerns and, as part of our ongoing supervision of mortgage intermediaries, will be carrying out more detailed follow-up work into the suitability of advice in the lifetime mortgage market.”

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