The Equity Release Council
Originally launched in 1991, the Equity Release Council (ERC) is an organisation that is supported by the leading providers of equity release within the UK. It was created to promote safe equity release products and to safeguard the interests of homeowners.
The ERC works with the UK government to help make equity release a mainstream product, working to change the overall consumer outlook on the equity release market and driving membership of the ERC, which is open to advisers, valuers, and any industry professional that has an interest in the equity release market.
The ERC Statement of Principles
Each member of the Council that provides equity release products is signed up to the Overarching Principles, to ensure that their customers are offered the best protection. The Overarching Principles specify that members will:
- Ensure that all their actions promote public confidence in equity release
- Act at all times in utmost good faith, with the best interests of their customers being paramount, by treating customers fairly in all their actions
- Ensure conflicts of interest are identified swiftly and managed fairly
- Seek to deliver suitable outcomes for customers from initial sale through every point of contact during the life of the product.
These Overarching Principles offer you and your clients peace of mind, and means your clients can use equity release products in confidence, knowing that they will be able to remain in their home for the rest of their lives, or until they enter long-term care.
The product standards are as follows:
- For lifetime mortgages, interest rates must be fixed or, if they are variable, there must be a “cap” (upper limit) which is fixed for the life of the loan
- You must have the right to remain in your property for life or until you need to move into long-term care, provided the property remains your main residence and you abide by the terms and conditions of your contract
- You have the right to move to another property subject to the new property being acceptable to your product provider.
- The product must have a “no negative equity guarantee”. This means that when your property is sold, and agents’ and solicitors’ fees have been paid, even if the amount left is not enough to repay the outstanding loan to your provider, neither you nor your estate will be liable to pay any more.
Members are only allowed to tell their clients that a product meets these product standards if it meets all of them. If clients are offered or are considering a product that does not meet all of the standards, the product literature must explain which standards are not met, and give an illustration of the types of risk that this might pose for them.