Equity release

Most complaints we see are about lifetime mortgages. Customers complain that:

• their loved ones were vulnerable and talked into equity release
• equity release wasn’t right for them – because they’d always planned to move or downsize
• they shouldn’t have to pay the early repayment charge – because they need long-term care and their mortgage has an exemption for this
• they jointly released equity, and now that their spouse or partner has died, or gone into care – the early repayment charge (ERC) is unfair

We also deal with:  

• home reversion plans
• sale-and-rent-back schemes
• hybrid lifetime mortgages

You have the opportunity to sort things out before we get involved. If a customer complains and you don’t respond within the time limits, or they disagree with your response, then they can come to us.

Find out more about how to resolve a complaint.

Things to consider

When dealing with a complaint about equity release, remember that your customers can often be in a vulnerable situation. The FCA has produced guidance on dealing with vulnerable customers, which you might find useful.

Lifetime mortgages have to be sold as part of an advised process. Mortgage Conduct of Business rules make specific provisions about lifetime mortgages and home reversion plans.

We’ll also take into account:

• whether you followed Equity Release Council advice
• whether you clearly explained the arrangement and the customer understood what they were agreeing to
• how the customer used the money they borrowed
• whether the customer could have got the money in a less expensive way
• whether the customer’s circumstances at the time made them vulnerable
• whether the customer is eligible for care, and the impact of this (this could mean that an early repayment charge shouldn’t have been made)
• where a couple has released equity together, whether it’s fair that the charge should apply if one of them dies or needs care

We’ll expect your response to demonstrate that you’ve thought carefully about:

• the questions you put to the customer
• the information you considered
• the reasons you had for the advice you gave the customer

We might ask you to:

• pay compensation to your customer for any distress or inconvenience they’ve experienced
• refund an early repayment charge – possibly with interest – if you charged it when your customer had to move into long-term care or downsize to a smaller property
• if equity release wasn’t right for your customer, we’ll ask you to put them (or their estate) back in the financial position they’d be in if they’d had suitable advice

Find out more about equity release best practice from the Equity Release Council.

Search our decisions database to find out about past decisions on equity release.