On 14 September 2023, the FCA published the results from its targeted review carried out over the last year on later-life mortgage advertising and advice.
The scope of the review consisted of the largest firms that are responsible for around half of all lifetime mortgage sales in the sector. It also followed up on the FCA’s earlier findings about poor quality of advice, and checking that standards among intermediaries have improved. The key findings from the FCA’s review are summarised below.
Financial Promotions
Despite clear and long-standing rules, the review found many inaccurate or misleading financial promotions. The FCA found instances of product benefits being highlighted without any balancing description of the risks, and firms using their FCA-regulated status in a promotional manner.
As a result of the review, almost 400 financial promotions have been removed or amended where issues were identified with them.
Suitability of Advice
The FCA has previously emphasised the need to deliver suitable advice and help consumers make informed decisions. The review found in many cases advice did not meet the standards expected. There was evidence of firms not acting on previous findings, for example, a lack of evidence that sufficient consideration had been given to consumers’ individual circumstances, and the advice lacked appropriate discussion of alternative options. Other examples included; not adequately considering borrowers’ income and expenditure, incentivising sales potentially at the expense of the quality of advice and good customer outcomes, and steering outcomes in favour of lifetime mortgage products.
Where standards have fallen short, the FCA are intervening robustly with firms to ensure significant improvements are made to their advice processes. The FCA also took the opportunity to reiterate the higher and more exacting standards firms are expected to apply under the Consumer Duty.
As a result of their work, the FCA confirmed that all firms included in the review have made changes to their sales and advice processes, and the majority of firms have also changed how their advisers are incentivised.
Sheldon Mills, Executive Director of Consumers and Competition, said:
‘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.‘
How can Square 4 help?
Square 4 Partners have been working closely with our clients across the lending and at-retirement space to enhance their advice processes and controls within the first line, as well as develop and implement robust outcomes monitoring and compliance assurance frameworks. In addition to our regulatory consulting expertise, we have an extensive network of highly skilled associates who we leverage to support us with casework, such as file checking, suitability assessments, and remediation activity.
If you would like to discuss any aspect of this review, your firm’s Consumer Duty activity, or any other conduct-related issues you are facing currently, please get in touch at: hello@square4.com.
Alternatively, you can contact:
Simon Goryl – Advisory Director sgoryl@square4.com
Sara Haworth – Senior Consultant shaworth@square4.com
