The TV advert in question was aired in January this year and featured a cartoon couple taking financial advice.
The voiceover said if borrowers’ existing mortgage deal was coming to an end, their current lender might have “bad news” about their new monthly payment.
It then suggested that an equity release plan with Key could help clear their mortgage with the option of reduced or no monthly repayments, which would give borrowers “more money in your pocket”.
The ASA launched an investigation to challenge whether the advert “irresponsibly used an appeal to fear about the potential of high mortgage rates to promote the product and misleadingly implied that the equity release plan was comparable to a normal mortgage”.
Key’s response to the investigation was that people looking to remortgage might not pass affordability due to higher interest rates and while people cleared their mortgage debt with a lifetime mortgage, many did not know the product could be used in this way.
The firm also said its advert made it clear that the mortgage was repayable on death or entry into long-term care, and said the tagline “so it’s good to know there’s another way” made it clear that the product was different to a standard mortgage.
The advert also signposted viewers to the Key website which encouraged them to find out more about the product and services before engaging with the business.
Advert clearance service Clearcast said the use of language in the advert made it clear the product was not suitable for everyone, did not unfairly prey on people’s cost of living concerns or imply that the lifetime mortgage was similar to a standard one.
ASA said because the advert was shown while there was widespread coverage about the cost of living crisis and said that highlighting that borrowers’ current lender might have “bad news” about mortgage repayments, it “risked exploiting some viewers’ concerns about their finances, and the fear of increased future mortgage repayments in particular”.
The regulator concluded that because the advert referred to increased mortgage costs and the rising cost of living with regards to a potentially vulnerable older audience, it “considered viewers were likely to be left with an unbalanced picture about the benefits and risks of this complex financial product and its suitability for their particular circumstances”.
“Because the ad played on the financial fears of viewers during a cost of living crisis, in particular an older audience who might be struggling financially, and did not make sufficiently clear the likely suitability of a complex financial product, we concluded the ad was irresponsible and misleading,” the ASA said.
The regulator said the advert must not appear again in the complained form and Key was told “not to exploit the financial fears of a vulnerable audience and to ensure they made sufficiently clear the risks and suitability of the advertised product”.
Key response
Key said it was “very disappointed by the ASA ruling regarding the complaint it received about one of its TV advertisements. We take our marketing and communications extremely seriously and have robust processes in place to ensure our messaging is clear, fair and not misleading”.
It added: “We strongly believe the ASA’s response does not take into account established precedents which have been carefully considered in the execution of this latest ad campaign. For example, the signposting and the legal balance statements shown in the advert make it clear that equity release will reduce an individual’s estate and is a more expensive form of borrowing – such statements have been an established precedent for advertising for several years and in our view this ruling goes against those precedents.
“The ASA has previously ruled that adverts must be considered alongside the compulsory advice received before a customer can take out equity release – a premise that we incorporated into our advert. The risks around this complex financial product are very clearly dealt with through our advice process and the advert poses no risk to our target audience.”
Key said: “In the current high interest environment, suggesting that a household’s mortgage payments may increase is not preying on fears, it is a clear reflection of the wider economic downturn the UK is currently facing, with many struggling with the rising cost of living.
“For some older mortgage borrowers, the reality is that they may have to downsize or risk losing their home. Highlighting that those who find themselves in this situation may have options that they have as yet not considered is not socially irresponsible.
“Our advertisement encourages customers to speak to their mortgage broker so they can gauge a balanced view before considering equity release.”
