A TV ad for an equity release scheme from Age Partnership Ltd, seen 26 February 2017, featured an older couple. They stated, “We began to worry about our finances, especially with living costs going up all the time. We had thought about releasing money from our home, so we visited the Age Partnership website. We were delighted to find out any money we released would be tax free. And more importantly, we'd continue to own our own home. We used some money to pay off our mortgage and with no monthly repayments we now have a rainy day fund, to top up our retirement income. Or even make those long awaited home improvements.” On-screen text stated “You only continue to own your home with a lifetime mortgage secured against your property” and “Equity Release will impact the size of your estate and it could affect your entitlement to means tested benefits”.
Nine viewers, who understood that customers would have to take out a mortgage in order to release equity on their property and objected to the claim “we used some money to pay off our mortgage”, challenged whether the ad was misleading.
Age Partnership Ltd stated that an equity release plan was a distinguishably different product than a traditional mortgage. It could only be taken out by people over the age of 55, did not require monthly repayments and the debt was repaid when the person died, or moved into long-term care. They therefore considered that it was incorrect to view an equity release plan as one mortgage replacing another. They stated that equity release was one financial solution that could be used to replace a mortgage. They stated that it was a requirement when taking out an equity release plan that any existing mortgage or other secured lending was fully paid off. They stated they had specifically highlighted that in the ad, which expressly stated “we used some money to pay off our mortgage”.
They stated that, as equity release advisors, they were obliged to reference the equity release solution as a whole offering, rather than showing a preference to specific plans, such as lifetime mortgages or home reversion plans. Until a consumer had been through the detailed advice process they were unable to confirm which type of plan was suitable for their particular needs. They pointed out that the on-screen text stated “You only continue to own your home with a lifetime mortgage secured against your property” and considered that made it clear that it was only with a lifetime mortgage that full homeownership was retained. They added that this wording was also intended to highlight that the ad was referencing a form of secured lending.
Clearcast stated that they were aware that to pay off a mortgage through equity release, consumers would need to engage with another financial product. However, they considered that the new plan would not equate to what most viewers would understand to be a traditional mortgage and the commitment it entailed. They considered that most viewers would understand that equity release allowed them to be relieved of the monthly commitment to meet a mortgage payment to ensure their home was not repossessed. They stated that one mortgage was not replaced by another mortgage in the real sense and that it was not correct to suggest that one debt was being discharged to create another equally onerous one. They stated that the plans being advertised could provide relief from a monthly mortgage repayment.
The ASA understood that the ad was promoting a lifetime mortgage, a common type of equity release scheme (and the only one that allowed the customer to continue to own their own home). We noted that, to qualify, consumers had to be over 55 and own their own home outright. We understood lifetime mortgage schemes generally removed the requirement for consumers to make ongoing monthly payments, and that the money borrowed would instead be recouped at a later date; for example, from the sale of the property or from the estate after death.
We noted that the ad stated “We began to worry about our finances, especially with living costs going up all the time” and considered it was targeted at older viewers (those old enough to qualify for the offer) who were concerned about their post-retirement finances, particularly as it was presented as a means to alleviate those financial concerns.
We acknowledged that the complainants believed the ad implied that there would be no mortgage with equity release. Although they understood that equity release might have different payment obligations, such as not requiring immediate regular payments, they considered it was effectively replacing one mortgage for another.
We considered whether the ad was sufficiently clear to provide viewers with the relevant information to understand the nature of the product being advertised and the implications of taking on a lifetime mortgage.
We noted that the voice-over stated, “We had thought about releasing money from our home”, whilst small on-screen text stated “You only continue to own your home with a lifetime mortgage secured against your property”. We considered that the average consumer would therefore understand that equity release involved borrowing money against the value of their home. However, we also noted that the ad did not specify how repayment was to be made, beyond indicating that there were “no monthly repayments”. We considered the repayment commitment and the circumstances in which the lifetime mortgage was likely to be paid back would not be clear to the average consumer, and was material information they needed to know.
We understood that the claim “We used some money to pay off our mortgage” was intended to indicate that a mortgage had to be paid off before viewers could take up the product. However, we considered it was unclear how the couple in the ad, who were concerned about their finances, had paid off their mortgage and whether, for example, they used the equity scheme for that purpose. Moreover it was not clear that this was a requirement of equity release, as opposed to a choice the couple in the ad had made voluntarily.
In light of the above, we considered that the ad did not sufficiently, clearly communicate relevant information and detail about certain elements of a lifetime mortgage, specifically how and when it was likely to be repaid, and whether or not the scheme could be taken up by those with outstanding payments on their mortgage.
Because the ad focused on the potential benefits of a lifetime mortgage without sufficiently communicating those other elements, we considered that the ad was ambiguous and was likely to cause consumers to make further enquiries regarding those products when they would not otherwise have done so. We therefore concluded the ad was misleading.
The ad breached BCAP Code rules 3.1 and 3.2 (Misleading advertising).
The ad must not be broadcast again in its current form. We told Age Partnership Ltd to ensure the nature of a lifetime mortgage was clear to viewers.