The FCA published the results of its multi-firm work on later life mortgage advertising and advice, which can be summarised as “action is needed to ensure good outcomes for later life borrowers”. However, surprisingly, some commentators have dismissed the urgency of any resulting action suggesting there is “nothing to see here” and that the FCA hadn’t said anything new.
Clearly that is wrong, or the regulator wouldn’t have issued the warnings that it has. Coupled with the release of a FCA policy statement which introduces a gateway for firms approving financial promotions, this points to the need for all later life lenders to urgently review their compliance processes.
While it may be true that there is nothing in the FCA announcement that was not predictable, that isn’t the point. It is worrying that it has had to repeat its message despite clear and long-standing rules and that it also had to immediately intervene to remove or amend almost 400 financial promotions. Sadly, the regulator found many examples of firms’ poor consideration of individual circumstances (including income and expenditure), dismissing discussions around alternatives, inappropriately incentivising sales, inaccurate and misleading promotions, the highlighting of product benefits without balancing descriptions of risks and inappropriately steering outcomes in favour of lifetime mortgage products. This sector has faced similar criticisms ever since the first home income plans appeared in the 1980s and all subsequent variations of the original products, so we ask the question – when will the industry learn?
It’s telling that firms included in the FCA review have had to make changes to their sales and advice processes as a result of it, giving credence to the fact that there was something wrong in the first place. It is also clear that most firms changed how they incentivise advisers. Providers that were not directly involved in the review must pay attention and learn from this.
Consumer Duty, of course, raises the stakes on these issues as the three cross-cutting rules add wider responsibilities onto firms to protect consumers. Our reviews can ensure that firms’ Consumer Duty requirements have been properly implemented and embedded to provide a high degree of confidence to senior management that the new consumer principle is being adhered to.
Our risk assessment work, tailored to each specific client, ensures high levels of client satisfaction as well as providing evidence of independent oversight. Get in touch to learn how our services can help you, whatever lending sector you are in.