Usually in circumstances like these, it is a situation where someone is asset rich but cash poor. That is, the value of their estate is high due to the property they own, but their income is very low and often too low to support normal outgoings. These equity release plans are generally used to increase someones income or release a cash sum to pay for a large expense that couldn't otherwise be afforded - new roof for example.
Whilst it may be of little comfort at the moment, these plans should come under the SHIP scheme (Safe Home Income Plan) which means that, yes, the debt will continue to increase, but the neighbour will never actually have to make a payment to the lender and the size of the debt will never be greater than the value of the property.
In reality, the only people who potentially 'suffer' would be any possible beneficiaries such as family or charities. Meanwhile though, the neighbour has had use of the money for whatever her needs were.
Whilst it is worrying that she can't now remember the details from when the plan started, it is impossible to say whether any mis-selling was involved.
Certainly the local CAB may be able to offer some assistance otherwise she might be able to get help from a family member if there any local to her.
It's not all doom and gloom and the neighbour can carry on living in her home for as long as she is able. If she were to go in to a care home, her house would need to be sold and only then would the equity release loan have to be repaid. Alternatively, if it were possible, she could downsize and use the surplus proceeds from the sale to pay off the loan.
Happy to discuss further off-list if required.