The Equity Release Council
Originally launched in 1991 as Safe Home Income Plans (SHIP), 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 schemes 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.
It continues to provide the same guarantees and safeguards that SHIP did in the form of the SHIP Standards Board, and continues to ensure the protection of consumers.
The ERC Statement of Principles
Each member of the Council that provides equity release products is signed up to the Statement of Principles, to ensure that their customers are offered the best protection. The Statement of Principles specifies that members will:
- Ensure that all their actions promote public confidence in equity release as a potential retirement solution
- Act at all times in utmost good faith
- Communicate high expectations for equity release outcomes in all their dealings
- Ensure conflicts of interest are managed fairly and reduced to the lowest practical level
- Exercise due skill, care and diligence in all that they do and uphold the standards set out by their professional bodies at all times
- Always act with the best interests of their clients being paramount, treating customers fairly in all their actions.
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 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 as continuing security for your equity release loan
- 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.
This Statement of Principles offers 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.
All Equity Release Council members who provide equity release products give consumers a no negative equity guarantee, meaning that no matter what happens to the housing market, they will never owe more than the value of their home when it is sold following death or entering long-term care.