Reverse Mortgage Loan Blog

The Australian Securities & Investments Commission says it is leading efforts to make advertisements for reverse mortgages clearer, after several cases were discovered where companies had made misleading statements about their products.

The commission says it is working with advertisers to make sure their marketing campaigns spell out the correct facts and do not entice consumers for the wrong reasons.

ASIC consumer protection executive director Greg Tanzer said the commission had uncovered five cases in a recent review where promoters falsely suggested their reverse mortgages did not need to be repaid.

“ASIC raised these concerns with the promoters of the advertisements,” he said.

“The statements used in the advertisements included ‘There are no repayments’, ‘…no loan repayments ever’ and ‘No need to make repayments’. In each case the promoter took immediate steps to either withdraw or amend their advertising.”

“ASIC also identified a potentially misleading claim regarding the impact of a reverse mortgage on pension entitlements which read, ‘Centrelink payments aren’t affected’.”

“ASIC considered that this claim could be misleading as taking out a reverse mortgage may affect a consumer’s Centrelink payments, depending on their individual circumstances and how they use the money they receive.”

Mr Tanzer said any reverse mortgage ad should make it clear that the loan had to be repaid sooner or later.

“Although reverse mortgages do not usually require the borrower to make regular repayments, they certainly require repayment. Typically, a reverse mortgage will need to be repaid when the home is sold or no longer occupied,” he said.

“The reverse mortgage market has more than doubled in the last 12 months and ASIC continues to be vigilant to ensure consumers are not misled.”

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