What happened?
Later life mortgages and equity release have returned to the regulatory spotlight after a wide-ranging FCA review raised serious concerns. The regulator flagged issues around advice standards, misleading financial promotions, and potential risks being underreported to clients.
These issues directly clash with the newly implemented Consumer Duty legislation. The regulator now expects all mortgage and equity release providers to review the findings and make immediate changes where they are falling short.
Why does it matter?
Equity release products are intrinsically complex and high-risk, making suitability and customer understanding critical, especially when dealing with vulnerable customers. Failing to meet Consumer Duty standards exposes firms to severe regulatory intervention and reputational damage.
Furthermore, the FCA discovered instances where sales were incentivised over providing quality advice, which is a major breach of the ‘customer first’ ethos of the Consumer Duty.
Who is affected?
This affects all equity release providers, advisers, and later life mortgage intermediaries, as well as their compliance and training functions.
Key risks
Firms in this sector face significant risks if they fail to align with the regulator’s priorities:
- Severe FCA enforcement actions due to misleading advertising and unsuitable advice.
- Incentive structures that promote sales volumes over client suitability, leading to poor customer outcomes.
- Failure to properly identify and support customers showing vulnerable characteristics.
Actions to take
Firms should adopt our five-step roadmap to address the regulator’s expectations:
- Step up customer communications and vet financial promotions closely.
- Enable effective, unpressured decision-making for customers and their families.
- Focus on meaningful conversations that go beyond simple transaction checklists.
- Set out clear best practice guidelines anchored in the Consumer Duty principles.
- Spotlight internal processes, incentive structures, and governance frameworks.
Wider implications
The FCA is shifting toward a highly proactive, outcomes-focused supervision model. Mortgage lenders can no longer rely on traditional checklists; they must prove and document that their products and advice consistently serve the customer’s best interests.
Recommendations
We recommend conducting a diagnostic review of historical sales files and financial promotions to identify potential gaps, as well as restructuring any commercial incentive models that could compromise advice suitability.
Supporting sources
Frequently asked questions
What did the FCA review find in the equity release market?
The review identified misleading financial promotions, underreported product risks, and sales incentivised over advice quality.
How does the Consumer Duty affect equity release firms?
It mandates that firms place customer interests at the heart of decision-making, ensuring communications are clear and advice is highly suitable, particularly for vulnerable consumers.
- FCA remuneration reform explained: what CP26/27 could mean for firmsAnalysis & Perspectives · September 2, 2026
- IBS Intelligence: Why financial services firms face growing AI governance scrutinyAnalysis & Perspectives · September 2, 2026
- FCA CP26/28: What the AIFM regime reforms mean for wealth managers and firmsRegulatory Horizon · September 2, 2026
- Will Value for Money assessments change how advisers compare pension providers?Regulatory Horizon · September 2, 2026
- BankingTCC helps retail banks, challenger banks, building societies and specialist banking providers strengthen governance, manage financial crime risk and demonstrate good customer outcomes. Our specialists support Consumer Duty, remediation, regulatory transformation, FCA intervention and compliance assurance programmes through advisory, managed services, specialist resourcing and technology-enabled compliance. With more than 25 years of experience supporting FCA-regulated firms, we help banks respond confidently to regulatory scrutiny while strengthening operational resilience and customer trust.
- General Insurance & ProtectionTCC helps insurers, brokers, MGAs and protection providers evidence fair value, strengthen customer outcomes and identify emerging customer harm. We assess product governance, claims performance, distribution oversight and vulnerability risks, helping firms create regulator-ready evidence, improve operational performance and demonstrate that products and services deliver value throughout the customer lifecycle.
- Lending & Consumer CreditTCC helps consumer credit firms evidence good outcomes, strengthen affordability and vulnerability frameworks, and manage complaints, remediation and regulatory risk. We support lenders with practical, regulator-ready compliance programmes that improve governance, customer treatment and operational resilience.
- Motor FinanceTCC helps motor finance lenders, brokers and providers assess redress exposure, prepare for large-scale customer reviews and strengthen complaints, affordability and Consumer Duty frameworks. We combine regulatory advisory, managed operations, specialist resource and technology-enabled assurance to deliver consistent customer outcomes, robust governance and regulator-ready evidence under heightened FCA scrutiny.