The Advertising Standards Authority has banned a TV ad from retirement specialists Age Partnership for being ‘misleading’.
The ad in question is for an equity release scheme and features an older couple who state that they are worried about their finances and had “thought about releasing money from our home”.
The featured couple says: “We used some money to pay off our mortgage and with no monthly repayments we now have a rainy day fund…” Meanwhile text appearing on the screen reads: “You only continue to own your home with a lifetime mortgage secured against your property.”
The advertising regulator received 10 complaints about the ad, nine of which came from 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”.
The ASA says: “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 response, 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.
The retirement specialist said 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, by including the line “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 and added that the on-screen text was intended to highlight that it was only with a lifetime mortgage that full homeownership was retained.
Advertising watchdog 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.
The ASA found that the ad did not 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”.
The authority concluded that the ad was misleading and must not be broadcast again in its current form.
John Charcol senior technical manager Ray Boulger saw the ad and says: “It’s disappointing that Age Partnership’s own compliance procedures allowed this ad to be broadcast. The FCA should also say why it failed to take action on the ad as it would not pass their ‘fair, clear and not misleading’ rule for communications.”