Norwich Union, the UK's largest insurer, came under fire in the House of Commons this week, as MPs criticised it for marketing its equity-release products irresponsibly.
George Mudie, a Labour MP and member of the Treasury Select Committee, said that advertisements that encouraged 55-year-olds to release equity from their home to spend on holidays or new cars was simply "not appropriate".
With the average woman expected to live around 30 years beyond their 55th birthday, customers could, he said, end up paying back hundreds of thousands of pounds in interest for a relatively small loan.
The Liberal Democrats' Treasury spokesman, Dr Vince Cable, congratulated Mr Mudie on his observations, adding that he was also concerned about whether elderly people were receiving adequate advice when it came to equity-release products.
"Large numbers of financial advisers, who vary enormously in quality and integrity, are simply not in a position to give quality advice on this matter because they have never been trained, they do not understand the complexities of the benefits system, and, ultimately, they have an interest in selling products," he said. "They do not have an interest in telling people to find a simpler solution such as trading down. As a result, people often receive bad advice."
In response to the comments about Norwich Union, Daren Carter, the company's director of sales and marketing for personal finance, said: "The comments made at the House of Commons ... do not reflect the strong controls and processes that Norwich Union has in place to give us assurances over the advice that we give to customers."
John Healey, Financial Secretary to the Treasury, said that he would pass a transcribed copy of the debate on to the Financial Services Authority.Reuse content