The FSA is warning that it will take swift regulatory action against firms which missell lifetime mortgages and says it has already seen evidence of poor financial promotion in the sector.
Speaking at the Council of Mortgage Lenders' annual conference in London on Tuesday, chief executive John Tiner said there is clearly potential for misselling in the area of equity release and revealed that a review of the sector could be an early priority for the FSA.
He told delegates at the conference that if evidence is found of badly designed lifetime or equity-release products being sold inappropriately to unsuitable consumers by a salesforce being offered incentives for volume targets, the FSA will take action against both the company and its senior management.
Tiner believes there is an inherent risk in lifetime mortgages as the target client base is potentially vulnerable and said the FSA has already seen some relatively poor financial promotions in the area.
He told lenders and intermediaries that they should be paying particular attention to the FSA's rules in the equity-release sector as they prepare for regulation.
Tiner said: “I want to make clear that if we do find that a badly designed lifetime mortgage product has been sold inapp-ropriately to unsuitable consumers by a salesforce that has been incentivised on volume targets, we will be looking to take regulatory action against the firm and its senior management.”