Publishing its ‘Financial Promotions Bulletin’, the regulator revealed serious shortcomings in a number of press and online advertisements marketing home reversion products.
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With regulation of the sector now in place, the FSA has warned promotions must be up to scratch otherwise firms will find themselves in trouble.
The bulletin said: ‘We conducted thematic work in two areas that are to be regulated from 6 April 2007: Self Invested Personal Pensions and Home Reversion Plans. In both areas we found that, had they been regulated by us now, we would have significant issues with their Financial Promotions. We will expect firms to take reasonable steps to ensure that any Home Reversion Plan Financial Promotion they produce meets our requirements to be clear, fair and not misleading.’
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It stated adverts must be transparent to both the advantages and disadvantages of the products and not try to hide or disguise any details. The FSA admitted that adverts produced by firms already working in regulated arenas were of a much better quality than those from firms unfamiliar with the regulatory environment.
Stuart Wilson, managing director of Equity Release Advisory Service, said:
“It shows the reality of the market that lifetime mortgages were regulated and the majority of the promotions were right. Financial Promotions is a hot potato for the FSA – if you ignore the rules and guidelines, you’re asking for trouble.”
