The Equity Release Council
The Equity Release Council (ERC) launched in 2001 and is the industry body for the UK equity release sector. It represents its member providers, qualified financial advisers, solicitors and intermediaries.
It exists to promote high standards of conduct and practice in the provision of and advice on equity release which have consumer safeguards at its heart.
These standards and safeguards have allowed the sector to grow, giving financial advisers and their customers confidence in the products, dispelling the myths about equity release, and educating the public about the potential to access the wealth in their home for a variety of uses.
The Product Standards
The standards exist to ensure equity release products are safe and reliable for consumers:
- 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.
- All customers taking out new plans which meet the Equity Release Council standards must have the right to make penalty free payments, subject to lending criteria.
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.
The Statement of Principles
Each member of the Council that provides equity release products is signed up to the these Overarching Principles, to ensure that their customers are offered the best protection:
- Ensure that all 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.
Required Customer Outcomes
Members will provide advice, information and professional services that are clear, transparent and impartial:
- Products and services offered should suit the customer needs best and be fairly priced
- Members should seek to identify and provide appropriate support to vulnerable customers
- Customers should be confident they can live in their own home for as long as they wish, or move to a suitable alternative property, as long as they abide by the Terms & Conditions of their contract
- Members should ensure customers understand their rights and responsibilities at every point of contact.