Equity Release

djr2031

Was listening to Martin on the radio a couple of weeks ago and thought it would be a good idea to talk with my parents about setting up powers of attorney.  Both are in 80s. 

Was surprised to find out that they had taken out equity release 7 years ago following a cold call even though they had savings close to the amount borrowed on the equity release. Is it too late to complain as I believe they were mis sold and is there any template letters available.

Many thanks 

swingaloo

Why do you think they were mis-sold. Were they both capable of making financial decisions at the time?

Tryinghardtosave

Do they still have the funds that were released ? perhaps you could look to settle it ?

djr2031

Reason for mis-selling is they both are easily confused, already had most of the money in savings and have used equity realease for day to day living.   As they had savings they didn't need the equity release.   Can't pay it off as the interest on the equity release mortgage has added to the amount owed and there is an early payment charge. 

Tryinghardtosave

what were they using for day to day living before the equity release ? Are they saving more of their income now ?
How much is the early repayment charge ? what is the interest rate ? Might be worth a phone call once you have the PoA 

Keep_pedalling

So without ER they would have used there savings for day to day expenses and would now have nothing left.

I can see no reason this can be classed as misspelling and your parents have suffered no financial loss.

eskbanker

Keep_pedalling said:

I can see no reason this can be classed as misspelling....

Unlike that

djr2031

Apart from the £5000+ they have paid in interest. Just wondering what you define as mis-selling?

Dazed_and_C0nfused

djr2031 said:

Apart from the £5000+ they have paid in interest. Just wondering what you define as mis-selling?

And how much interest have they earned from retention of the savings they already had and no longer needed to use for day to day living?

dunstonh

djr2031 said:

Apart from the £5000+ they have paid in interest. Just wondering what you define as mis-selling?

As of yet you haven't given any valid missale reason. 

They haven't used their savings and received interest on that and have spent some of the money.

An equity release from 7 years ago would have involved a solicitor to lay out the risks.    It is common for equity release firms and the solicitor to recommend involving the children as failure to do so often finds the children angry that the inheritance they thought they were getting is going to be lower and they tend to then complain about misselling despite not being there for any stage of the transaction.    However, if it up to the borrowers if they want to do that or not and some from the older generation don't like to involve direct family in their finances.

We don't know if it was missold or not.  Its would be unusual nowadays but possible but as of yet on this thread, you seem to be more unhappy that they have done it and that is not a valid complaint reason.

You make reference to them being confused but at the same time you say you are talking to them about setting up a POA.    You can only do that if they are mentally able to understand it.   So, on the one hand you say they are confused but on the other you indicate they are not.    However, it would be their mental capability 7 years that matters. Not now.     If you were concerned about their mental capability 7 years ago why were you not talking about a POA then not only now?

eskbanker

djr2031 said:

Apart from the £5000+ they have paid in interest. Just wondering what you define as mis-selling?

You might wish to review the information on the FOS site, and in particular this case study:

https://www.financial-ombudsman.org.uk/decisions-case-studies/case-studies/told-take-lifetime-mortgage-didnt-need-money

That's not to say that the details are close enough, but IMHO worth researching further as to exactly what is considered to be misselling by the likes of FOS....

https://www.financial-ombudsman.org.uk/businesses/complaints-deal/mortgages/equity-release