It’s not always easy to tell whether you’ve been mis-sold to or not. Here’s a test to give you some idea if you could be eligible for compensation.
Test to find out if you’ve been mis-sold your equity release mortgage
1. When your mortgage was sold to you, did the advisor:
- Take the time to go through all the details of the product with you?
- Give you plenty of information, but leaving you feeling confused?
- Not provide you with much useful information at all?
- You can’t remember – it was a long time ago.
2. Did your advisor talk about the risks involved with equity release mortgages?
- Yes, they provided information about all the risks, and assessed your attitude to risk too.
- They discussed the risks, but you weren’t quite sure what they were.
- They didn’t really talk about risks at all.
- They might have done – you don’t recall.
3. Did you know exactly what the equity release mortgage would cost?
- Yes, the advisor went through all the fees, including any early repayment charges.
- They talked about fees, but you weren’t totally sure about what you’d have to pay.
- They failed to mention additional fees, like set-up costs.
- You don’t remember.
4. When they sold the equity release mortgage to you, did you feel:
- Comfortable and happy with the product, and its implications for your future.
- A bit baffled, but content to trust the advisor’s recommendations.
- Nervous, and uncertain about whether you should take out the mortgage or not.
- You’re not sure how you felt at the time.
5. How would you describe the advisor’s method of selling?
- Fair, transparent and friendly; you felt at ease with them, and didn’t feel pressurised at any point.
- They did their job well enough, but you didn’t feel entirely sure about what you were agreeing to.
- Somewhat aggressive or pushy; you didn’t feel they had your best interests at heart.
- You can’t recall what their selling approach was like.
6. Were you given a full range of options?
- Yes, your advisor laid out a wide range of options; including not taking out an equity release mortgage at all.
- They presented you with a few different options, but you didn’t feel you knew enough about any of them to make a completely informed choice.
- No, you were only provided with one option.
- You can’t remember.
7. Did the advisor suggest that your new mortgage would improve your lifestyle?
- No, instead they emphasised that the mortgage should be used to provide necessary funds for your retirement, not expensive holidays.
- They made references to lifestyle activities, such as treating the family to special days out etc. but didn’t explicitly suggest the cash should be used for that.
- Yes; they spent quite a bit of time ‘selling the dream’; discussing all the trips abroad that you could take, or the campervan that you could finally afford to buy, for example.
- You don’t remember what they said regarding your future lifestyle.
8. Did they explain what would happen if you or your partner needed to go into a care home, or passed away?
- Yes, they explicitly discussed this, and explained how the debt would be repaid.
- They mentioned it to a degree, but it wasn’t clear exactly how the debt would be paid in the event of your death (or needing to go into residential care).
- They didn’t cover this topic at all.
- You’re not sure.
9. Did the advisor tell you how much you would owe once the term was complete?
- Yes, they gave you specific figures, and explained how the interest would compound over time.
- They gave you some rough figures, but didn’t explain them very well.
- No, they didn’t tell you how much you would owe.
- You can’t remember if they mentioned this or not.
10. Do you feel that it was the advisor’s fault that you lost money from taking out an equity release mortgage?
- No, you feel that they did their job well.
- You’re not sure.
- Yes, you think they failed to advise you properly.
- You don’t recollect the meeting well enough, so don’t feel able to say.
Record how many of each (‘A’, ‘B’, ‘C’ and ‘D’) answer you selected, then refer to the guide below.
If you selected mostly A’s (seven or more), it sounds like your financial advisor did a fairly good job when they sold you an equity release mortgage. However, if you answered even just of the questions differently (i.e. a B or C), this should set alarm bells ringing. Their job as an advisor is to explain the mortgage product, assess your attitude to risk, outline exactly what you’ll owe at the end of the term, and provide you with a full range of options. Failure to do so counts as mis-selling.
If you selected some ‘B’ answers, this suggests that your financial advisor didn’t fully explain the details to you, or left you feeling confused about certain aspects of the mortgage. A good financial advisor should provide you with all the details you need, and ensure that you feel comfortable enough to ask them any questions. Remember, lack of information is regarded as mis-selling too.
Even selecting one ‘C’ answer is concerning. Failure to give you the full details, or deliberately withholding important information regarding how much you’ll owe, or the risks involved, is a clear-cut case of mis-selling. If you chose more than one ‘C’ answer, you may be eligible to seek compensation for your financial losses.
Don’t worry if you selected some (or even a lot) of ‘D’ answers. Many people can’t remember the details of their meeting with the financial advisor, especially if it happened several years ago. Focus on the aspects you can remember instead, as they’ll provide vital clues as to whether you were mis-sold to or not.