The Financial Conduct Authority (FCA) is undertaking “exploratory work” to understand equity release and later life mortgage lending over fears improper advice may have been given to older clients.
PA understands the regulator’s supervision team is investigating the equity release sector and mortgage lending to older borrowers as it fears they could have been given incorrect advice.
The investigation follows several report findings which revealed financial products designed for older borrowers have not been fit for purpose and that retirees could be steering towards less suitable deals.
The equity release market experienced its busiest quarter so far this year and its third-busiest on record as older homeowners continued to access property wealth. The Equity Release Council found that almost £11m in property wealth was unlocked by homeowners aged 55 and over in Q3. Before that, the value of equity release funding to over-55s saw an 8% lift from £911m to £988m in Q2.
Equity Release Council chief executive officer Jim Boyd said: “Recent growth from a low base has established equity release as part of mainstream financial planning conversations, as part of a wider increase in later life lending to older consumers.”
This is Money reported that the FCA has been engaging with firms to help it ‘better understand the market’ to reduce ‘any potential harms’.
He said this is a “logical result” of an ageing population looking to use one its main sources of wealth.
He added: “We welcome the FCA’s exploratory work into lending in later life and look forward to maintaining our close dialogue with the regulator as the market continues to evolve.”