A TV ad for an equity release scheme from Age Partnership, seen on 12 March 2018, featured a couple who 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 the money we released to pay off our existing mortgage, and since equity release is only repaid when we pass away or move into long term care we now have no repayments. We’ve even a little left over for our retirement. If you are over 55 and own your own home, contact Age Partnership for a free brochure … or use our equity release calculator at agepartnership.co.uk”. On-screen text stated “Fee of 1.95% (minimum £1395), only payable on completion. Equity released, plus accrued interest to be repaid upon death, or moving into long-term care. You only continue to own your home with a lifetime mortgage secured against your property. Equity release requires paying off any existing mortgage. Equity release will impact the size of your estate and entitlement to means tested benefits”.
Two complainants challenged whether the omission of the interest rate payable on the equity release was misleading.
Age Partnership Ltd said they were an equity release broker that provided whole-of-market equity release advice and clarified that they did not provide their own equity release products or plans.
They explained that there were two types of equity release products: home reversion plans and lifetime mortgages. Interest was not payable on home reversion plans but did accrue on a lifetime mortgage and would be payable when the individual died or moved into long-term care. They said that a customer could also opt to make regular interest payments during the lifetime of the plan.
They said there were currently 374 individual equity release plans across the whole of the market and for those plans where interest was applicable (i.e. lifetime mortgages), each plan would have its own specific interest rate which could fluctuate daily. Additionally, although most lifetime mortgages had interest rates that were fixed for life once the customer entered into the contract, some plans had variable rates which would change during the customer’s lifetime.
They said that when an individual applied for equity release through Age Partnership, a qualified equity release advisor went through a fact finding assessment where they were able to build a picture of an individual’s objectives for the money they proposed to release and gained an understanding of their financial situation as well as the customer’s future plans. In the same way as a standard mortgage broker, the advisor would then recommend the product that would best suit the individual and it would be at that stage that any relevant interest rate would be established.
They explained that if they were to reference a specific interest rate on their TV ads they would have to take a ‘typical’ view which would involve taking an average of the hundreds of lifetime mortgage plans available, with the result that the rate quoted would not be representative of reality for the majority of viewers. The rate could date instantly and would not be relevant for individuals suited to a home reversion plan.
They stated that they would include an interest rate on their TV ads if they were a lender referencing the features of a specific lifetime mortgage plan. However, as they were advertising a whole-of market equity release service and not an individual plan from a single lender, it would be inappropriate to quote an interest rate. They stated that they had searched other equity release and mortgage brokers and could not find any reference of a specific interest rate in their ads.
Clearcast stated that they did not request that the interest rate payable on the equity release to be mentioned because there was no requirement for it and there wasn’t only one product. They stated that there were many products that were offered so there was no practicable way of communicating a single rate that would be relevant or useful to viewers.
The ASA considered that consumers would understand that the example shown in the ad promoted a lifetime mortgage, a common type of equity release scheme which was one of the types of equity release products offered by the advertiser. We considered that consumers would understand that the ad provided general information about how a lifetime mortgage worked, rather than referencing the specific terms of the product and was an illustration of the type of experience consumers may have when opting for a lifetime mortgage. We understood that a lifetime mortgage was a mortgage secured on a property which allowed consumers to continue to own their home. Consumers would have the option to make repayments or let the interest accrue. The loan amount and any accrued interest would be paid back when the individual died or moved into long-term care.
We noted that the on-screen text in the ad stated “equity released, plus accrued interest to be repaid upon death”, which indicated that interest had to be paid on the product, although a specific rate was not referenced in the ad. We considered that consumers would understand that interest rates for a lifetime mortgage would vary based on the plan provider chosen and an individual’s financial circumstances. Therefore, we concluded that the omission of an interest rate on a lifetime mortgage as featured in the ad was not misleading.
We investigated the ad under BCAP Code rules
Advertisements must not mislead consumers by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.
Material information is information that consumers need in context to make informed decisions about whether or how to buy a product or service. Whether the omission or presentation of material information is likely to mislead consumers depends on the context, the medium and, if the medium of the advertisement is constrained by time or space, the measures that the advertiser takes to make that information available to consumers by other means. (Misleading advertising) and 3.10 3.10 Advertisements must state significant limitations and qualifications. Qualifications may clarify but must not contradict the claims that they qualify. (Qualification), but did not find the ad in breach.
No further action necessary.