Summary of Council decision:
Two issues were investigated, both of which were Upheld.
A TV ad for an equity release mortgage product seen in January 2023 featured a cartoon sketch of a couple taking financial advice. The voice-over stated, “If you’re retired and your existing mortgage deal is coming to an end, you might find your current lender has some bad news regarding your new monthly repayments. So it’s good to know there’s another way. With an equity release plan from Key, you could clear your current mortgage and with the option to make reduced or no monthly repayments, you could have more money in your pocket. So visit keylaterlife.co.uk to see how we could help, or talk to your mortgage advisor. Key, for the life in later life.” On-screen text stated, “Equity release will reduce your estate’s value & may affect your entitlement to means-tested benefits … Typically, the loan plus compound interest is repaid when the plan comes to an end following death or entry into long term care. Clearing existing mortgage with equity release may result in higher cost of borrowing. 55+ homeowners only. Our equity release advice relates to Key branded lifetime mortgages only – a loan secured against your home”.
The ASA challenged whether the ad:
1. irresponsibly used an appeal to fear about the potential of high mortgage rates to promote the product; and
2. misleadingly implied that the equity release plan was comparable to a normal mortgage.
1. Key Retirement Solutions Ltd (Key) said lifetime mortgages were a type of equity release mortgage where the loan was secured against the value of the client’s home and was usually repaid from the sale of the home when the client died or moved permanently into residential care. They said they were an alternative to standard mortgages and addressed a growing societal need. They provided information showing that debt amongst over 55s was increasing, with most being secured debt such as mortgages or car loans.
Key said the cost of living and the cost of borrowing and servicing debt in the UK had increased significantly since the mini-budget in September 2022. Increased interest rates and lower disposable incomes could mean that those looking to remortgage might not pass affordability checks undertaken by providers of standard residential mortgages. Most of their customers used the lifetime mortgage to pay off an existing mortgage, but many people did not know lifetime mortgages could be used in this way.
Key believed the ad made viewers aware of a product that could solve pressing financial needs and might better serve customers’ needs than a standard mortgage. It offered a no negative equity guarantee, a fixed-for-life interest rate and the ability to start/stop making payments at any time.
Clearcast considered it was reasonable for the ad to state some of the possible short-term benefits of taking out a plan with Key as an alternative to a traditional mortgage and that did not unfairly prey on consumers’ cost of living concerns, given that the ad set out the possible financial consequences. They believed that increases in interest rates on many mortgage deals had been widely publicised and, on that basis, did not consider it irresponsible or unreasonable for Key to highlight that to viewers and make them aware of the product. They considered the use of conditional language made it sufficiently clear to viewers that the advertised product might not be suitable for everyone. They stated that, at the end of the ad the voice-over directed viewers to visit Key’s website to arrange an appointment with an adviser to see if they “could help”, or invited viewers to talk directly to a mortgage advisor to get more guidance on whether the advertised product was suitable for them.
2. Key said on-screen text made clear that the advertised lifetime mortgage was only repayable on death or entry into long-term care and was therefore not subject to expiration on a certain date. They believed it was clear that a lifetime mortgage was different to a standard mortgage and that this was reinforced by the statement “So it's good to know there’s another way”. The ad included details required by the Finanial Conduct Authority (FCA) about the features and risks of a lifetime mortgage, in particular “Clearing existing mortgage with equity release may result in higher cost of borrowing” in the on-screen text.
They said the ad signposted viewers to Key’s website, where they could learn more about their products and services before engaging with them and suggested discussing options with a mortgage adviser. This meant that viewers could consider other options and the differences of an equity release plan further before enquiring with Key. They said that it was necessary for consumers to obtain regulated advice in respect of equity release before proceeding with an application for an equity release product and direct applications from consumers were not accepted.
They provided detail about the application and advice process. Potential customers were made aware of the alternatives and if the advice process was discontinued, the consumer was not charged. It was a regulatory requirement for the lifetime mortgage lender to provide written information detailing the features, risks and terms of the proposed borrowing to the customer. Customers were required to take independent legal advice through the process and before completion.
Clearcast said that, based on the description of the product in the voice-over and the qualifying on-screen text, they considered the ad provided sufficient information about the product for the viewer to make an informed choice about whether it could be suitable for them. They did not believe the ad implied that Key’s product was similar to a traditional mortgage, but offered an alternative that viewers may wish to consider if their current mortgage was coming to an end.
1. & 2. Upheld
The ASA understood that the ad was promoting a lifetime mortgage, a common type of equity release scheme for consumers aged over 55. 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 considered the ad presented lifetime mortgages as a solution to financial concerns. Whilst we understood that a lifetime mortgage would be a suitable product for some consumers, it was also a complex financial product which carried different benefits and risks to a standard mortgage and would not be an appropriate alternative in all circumstances.
The ad was seen in the context of widespread news coverage of the increasing cost of living. That coverage had included a focus on rising interest rates and increased mortgage repayments, which had left some people struggling to afford repayments when their current mortgage deal had come to an end. We considered the ad was aimed at an older audience who might be struggling financially.In that context, we considered that the voice-over claim “… you might find your current lender has some bad news regarding your new monthly repayments” would be understood as a reference to potentially increasing mortgage costs, during a wider cost of living crisis. This risked exploiting some viewers’ concerns about their finances, and the fear of increased future mortgage repayments in particular.
The voice-over continued, “So it’s good to know there’s another way”. Although we considered viewers would understand that lifetime mortgages and standard mortgages were different products, we considered they might also infer from the voice-over that one product could be straightforwardly substituted for the other at the end of an existing mortgage deal. We considered the ad implied that a lifetime mortgage was likely to be suitable for those over 55 who currently had a standard mortgage.
The voice-over pointed out the potential benefits of the advertised product: “… you could clear your current mortgage and with the option to make reduced or no monthly repayments, you could have more money in your pocket.” Although the on-screen text provided some information about the risks associated with the product, such as “Equity release will reduce your estate’s value” and “Clearing existing mortgage with equity release may result in higher cost of borrowing”, we considered the text setting out the risks had less prominence than the claims in the voice-over which set out the benefits.
Given that the ad alluded to increased mortgage costs and the cost of living crisis and the financial concerns of a potentially vulnerable older audience, we considered viewers were likely to be left with an unbalanced picture about the benefits and risks of this complex financial product and its suitability for their particular circumstances.
Because the ad played on the financial fears of viewers during a cost of living crisis, in particular an older audience who might be struggling financially, and did not make sufficiently clear the likely suitability of a complex financial product, we concluded the ad was irresponsible and misleading.
The ad breached BCAP Code rules 1.2 (Social responsibility), 3.1 and 3.2 (Misleading advertising).
The ad must not be broadcast again in the form complained of. We told Key Retirement Solutions Ltd not to exploit the financial fears of a vulnerable audience and to ensure they made sufficiently clear the risks and suitability of the advertised product.