Expert Verified5 Ways the FCA Protects You When You Take Out Equity Release in 2025
- Last Updated: 05 Aug 2025
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Be aware. Equity release comes with drawbacks which are important to think about. Lifetime mortgages are secured loans. Compound interest means the amount you owe can grow quickly. Equity release reduces your estate's value and may impact means-tested benefits.Key Takeaways...
- The FCA is the UK's financial watchdog, ensuring that financial markets treat consumers fairly while authorizing and overseeing financial firms, upholding the integrity of the UK’s financial markets.
- For equity release schemes, the FCA sets strict guidelines that firms must follow, playing a vital role in securing retirees' financial interests by regulating providers and products.
- The FCA enhances the safety of your equity release investment, enforcing adherence to regulations that help protect your financial interests.
The FCA, a crucial regulatory body in the UK financial industry, is often recognised but not always well understood in terms of its exact functions and operations.
When it comes to the intricacies of power, accountability, and the promise of fair finance, the inner workings of the FCA can be difficult to understand.
In This Article, You Will Discover:
The EveryInvestor team will delve into the FCA's role and purpose, it's involvement in the equity release market, and the risks and concerns associated with equity release that have been highlighted by the FCA.
This comprehensive guide to FCA is meant to educate and inform consumers and investors about it's role and operations.
At EveryInvestor, we are committed to maintaining the highest standards of accuracy and comprehensiveness. Our researchers have spent hundreds of hours analysing the FCA's latest official documentation, independent reports, and industry publications.
Therefore...
What is the Financial Conduct Authority (FCA)?
The FCA is a governmental regulatory body in the UK (part of the UK's HM Treasury), charged with authorising, overseeing and regulating financial firms, from banks and insurance companies to credit unions and financial advisors, and investment firms.1
The FCA regulates approximately 50,000 financial firms in the UK, and it's primary purpose is to safeguard the integrity of the UK’s financial markets, promoting fair treatment and transparency for consumers, whilst ensuring the industry remains stable and competitive.2
In simpler terms, the FCA acts as a watchful guardian making sure that financial companies play fair and keep the customers' interests in mind.
Learn more: Equity Release Ethics
The FCA's Role and Purpose
The FCA’s role and purpose revolve around ensuring that the financial markets in the UK remain secure by protecting consumers, maintaining a stable sector, and encouraging a productive rivalry between financial service companies.3
The FCA oversees firms, including banks, insurance companies, investment firms, consumer credit firms and other financial services, to ensure they abide by standards that benefit consumers and the economy.4
By imposing fines, revoking licenses, and even pursuing legal action, the FCA has the authority to look into and prosecute companies and people who violate it's rules and standards. 5
In terms of it's operational focus, the FCA decided to prioritise four key areas...
- Future-proofing financial services.
- The prevention of financial crime.
- Prioritising the needs of the consumer.
- Improving the UK’s position in international wholesale markets.6
How Does the FCA Operate?
The FCA is a department of the UK's HM Treasury but generally receives it's funding from fees paid by member firms.
It sets standards, investigates and enforces where these are not met, and provides services to protect consumers.7
The FCA focuses more on results than on the process, aiming for better outcomes for consumers and the market instead of just enforcing rules.8
The FCA's approach to regulation is based on these three key statutory objectives...
- Safeguarding consumers,
- Encouraging competition, and
- Improving the integrity of the market.
The FCA and Innovation
When it comes to the FCA and innovation, the institution also promotes services through it's Regulatory Sandbox.
This creative concept allows firms to experiment with novel goods and services in a controlled setting, with support and guidance from the FCA.
The aim is to encourage new and innovative ways of delivering financial services that benefit consumers and promote competition.
The FCA’s Regulatory Sandbox has supported over 170 firms since it's launch in 2016, and has helped to develop innovative financial products and services, such as digital identity verification and peer-to-peer lending platforms.9
The FCA is also responsible for overseeing the UK's transition away from LIBOR, the lending benchmark that’s set to be phased out by September 2025 due to concerns about its reliability and accuracy.10
The FCA has launched several initiatives to help financial institutions transition to alternative benchmarks, such as SONIA (Sterling Overnight Index Average) and SOFR (Secured Overnight Financing Rate).11
How is the FCA Funded?
The FCA’s funded by the firms it regulates, through annual fees and levies.12
These funds are used to cover operational costs, supervise firms, and enforce regulatory standards.
Did you know?
Any fines collected from non-compliant firms (minus enforcement costs) go directly to the UK Treasury, and not the FCA.13
What Is the Role of the Financial Conduct Authority in Equity Release?
The FCA plays a critical role in ensuring the integrity of equity release products.
As regulators, they set standards and guidelines that firms offering equity release must adhere to, protecting consumers from potential financial harm.
They assess each firm's compliance, ensuring transparency, fairness, and the promotion of competition. Additionally, the FCA plays an educational role, equipping consumers with knowledge about the risks and benefits of equity release.
The FCA's unique 'Treating Customers Fairly' and 'Consumer Duty' initiatives are central to this, promoting customer-centric practices amongst firms. Their commitment to consumer protection makes the FCA a crucial player in the equity release sector.
The FCA’s Achievements
The FCA’s achievements include securing customer refunds worth £30mln from unauthorised companies and cancelling the authorisation of 201 firms for standards violations in 202214, and banning over 10,000 deceptive social media ads in 2022 and 2023.15
In 2022, the FCA also worked to ensure that steelworkers affected by the British Steel Pension Scheme scandal will receive on average £45,000 in compensation for unsuitable advice.16
The FCA’s Challenges
The FCA’s challenges include improving it's digital capabilities, developing the necessary frameworks and skills to regulate financial promotions associated with particular crypto-assets, and securing increased operational funding.17
Now that we have taken a closer look at how the FCA works, we can explore it's role in the equity release sector.
Does the Financial Conduct Authority Regulate the Equity Release Market?
The Financial Conduct Authority regulates the equity release market in the UK, setting the rules and guidelines that all providers must adhere to.18
This includes ensuring financial advice given to consumers is appropriate, clear, and not misleading19, as well as regulating product standards.
The FCA’s Involvement in the Equity Release Market
The FCA's involvement in the equity release market includes setting standards for equity release providers and advisors, monitoring their compliance with these standards, and taking enforcement action against those that breach it's rules and regulations.20
The FCA also provides guidance on managing the risks associated with equity release21 and allows consumers to check the registration of equity release providers and advisors.22
Legal Requirements for Equity Release Providers
The legal requirements for equity release providers include ensuring that the borrower has their own solicitor to represent and advise them on the equity release process.23
Equity release providers are legally required by the FCA to provide clear, fair, and not misleading information, ensure their services meet the needs of their customers, and treat customers fairly if they fall into arrears.24
FCA Regulation of Equity Release Advisers
FCA regulation of equity release advisors includes ensuring they meet certain standards of conduct and competence.25
Equity release advisors must be authorised and regulated in the UK by the FCA.26
They are also required to give advice that is suitable and in the best interests of the client, fully considering their needs, circumstances, and aspirations.27
Advisers must also be open about the fees they charge and any possible conflicts of interest they may have.
3 Benefits of Using FCA-Regulated Equity Release Services
The three benefits of using FCA-regulated equity release services are all focused on consumer protection through stringent regulation adherence.
A quick look at these three benefits...
- Customers receive clear and unbiased advice, tailored to their needs. If a consumer feels that they have been treated unfairly by an FCA-regulated equity release provider or advisor, they can make a complaint to the firm and, if necessary, to the Financial Ombudsman Service (FOS).29
- Providers must treat customers fairly, ensuring transparent terms and conditions. For example, they must ensure that their communications with consumers are accurate and can be clearly understood.
- FCA-regulated firms are required to have robust complaints-handling procedures in place and provide consumers with access to a free complaints service. If a provider fails to meet their obligations, customers have recourse to the Financial Ombudsman Service or the Financial Services Compensation Scheme.
Does Equity Release Carry Risks and Concerns?
Yes, equity release carries risks and concerns, which must be addressed by FCA-regulated equity release providers and advisors with clear and transparent information.
These risks include...
- Debt accumulation, as the interest on an equity release loan can compound over time, potentially exceeding the property's value.
- Equity release may affect eligibility for state benefits and reduce the value of your estate.
- You may face Early Repayment Charges, should your circumstances change and you decide to repay your loan early.
- If you take out a home reversion plan, you will not be given your home's full market value in return.
- There is a limit on how much equity you can access, and there is the possibility that you may use your available equity too early.
- Taking out equity release will reduce the inheritance you are able to leave behind.
FCA Guidance on Managing the Risks Associated with Equity Release
FCA guidance on managing the risk associated with equity release emphasises the importance of professional advice.
The FCA insists providers ensure potential customers understand all implications, including how equity release could affect tax status, benefit eligibility, and inheritance.
The FCA also promotes comparison and exploration of other possibilities in order to make the most appropriate decision for your individual circumstances.
How to Check FCA Registration
To check FCA registration, visit the FCA's Financial Services Register online and enter the equity release provider or advisory firm's name.
The register will show if the firm is authorised and regulated by the FCA, and what activities it is authorised to undertake.
The Financial Services Register also provides information on regulated firms and individuals, including details of their permissions, contact details, and disciplinary history.
Importance of Choosing an FCA-Regulated Equity Release Provider
The importance of choosing an FCA-regulated provider comes down to the fact that it gives consumers access to protections not otherwise available.
These protections include impartial advice, fair treatment, and the right to complain to the Financial Ombudsman Service if things go wrong.
Common Questions
The FCA’s role in the equity release market is to regulate it, protecting consumers from unfair practices.
It does this by setting rules for providers and advisors, ensuring firms meet these standards through active supervision, and taking enforcement action against those that breach it’s rules and regulations.
A financial institution can obtain an FCA certification through the FCA’s authorisation process.
This involves demonstrating that they adhere to the FCA’s principles, which include, among other stipulations, managing their company with proper skill, diligence, and care, keeping sufficient financial resources in reserve, and ensuring that client assets are protected.30
The Financial Conduct Authority’s complaints process for FCA-regulated equity release providers involves assessing potential issues on a market-wide level and ensuring that regulated providers have a process in place for resolving complaints.31
If you wish to complain about an equity release provider, your first step is contacting the firm in question.
If the provider’s response does not satisfy you, you can direct your complaint toward the Financial Ombudsman Service.32
You do not need worry about FCA scams, but you should definitely be aware of potential scams where fraudsters pose as FCA officials or use the FCA’s name to try to trick consumers out of their money.33
Always verify a firm’s FCA registration on the official Financial Services Register; never just rely on information provided by the firm.
A good tip
Be wary of unsolicited communications.
The FCA may on rare occasions contact individuals to help in an investigation, but if you are receiving calls from outside the UK or an email from a non-official account, steer clear.34
Consumer Duty is a set of principles implemented by the FCA to further protect consumers.35
The Consumer Duty will require businesses to act in the best interests of their customers and to prevent harm. For the equity release industry, it will reinforce the need for clear, fair, and suitable advice.
The Consumer Duty came into effect on 31st July 2023.36
The Financial Services Register’s a public record maintained by the FCA that shows whether a firm is authorised, the financial activities it is permitted to conduct, and any action taken against it.
The Register provides firms’ contact details and disciplinary history, as well as information on individuals’ qualifications and registration status.
The FCA Handbook’s a guide containing the complete set of rules and guidance by which the FCA regulates firms.
It provides detailed instructions on many areas of financial regulation and is a crucial resource for firms to ensure compliance.
You can find the FCA Warning List on the FCA’s official website.
This list shows firms and individuals that are operating without authorisation, and those that the FCA believes are scamming people.
Yes, you can perform an FCA company search using the FCA’s Financial Services Register.
This online tool allows users to search for firms and individuals by name or registration number and allows them to verify if a firm is authorised and regulated in the UK by the FCA and what services it is permitted to offer.
The Financial Conduct Authority (FCA) is the regulatory body responsible for overseeing financial markets and firms in the UK. It is an independent organisation funded by fees paid by the firms it regulates.
The FCA aims to ensure that financial markets are fair, transparent, and efficient, and that consumers are protected from potential harm.
The FCA’s role is to regulate and supervise the conduct of financial firms, promoting competition and integrity in the industry. By setting rules and standards, conducting market studies, and enforcing compliance, the FCA works to maintain the stability and integrity of the financial system, as well as protect the interests of consumers.
The Financial Conduct Authority (FCA) is responsible for regulating financial markets and firms in the UK. It’s main objectives include protecting consumers, promoting competition, and enhancing market integrity.
The FCA sets rules and standards for financial products and services, supervises firms to ensure compliance, and takes action against misconduct or breaches of regulations.
The FCA also educates and informs consumers about financial matters, provides guidance, and enforces consumer protection laws. It works to promote fair and transparent markets, preventing market abuse and ensuring that investors, including those over 55 looking at equity release options, have access to accurate and reliable information to make informed decisions.
In Conclusion
Whilst equity release can provide financial benefits, it also carries significant risks and potential pitfalls.
It is therefore vital to seek professional, FCA-regulated advice, understand all implications, compare alternatives, and take advantage of the protections offered by FCA regulation.
Taking these steps can enhance the safe and effective use of equity release, so be sure to check that your equity release provider and advisor are authorised and regulated in the UK by the FCA.
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