The Equity Release Council has launched a new version of its standards which includes a new Consumer Charter and introduces a sixth product standard.
The changes were made following input from eight working groups as well as a consultation with the focus being to make the standards clearer and more accessible while continuing to uphold the highest level of protection for consumers.
As part of the standards refresh, the Council has launched a new Consumer Charter. The document, that members will be encouraged to use with customers, outlines what people can expect when working with an Equity Release Council member.
This builds on the work which began when consumer-focused equity release product standards were first introduced in 1991.
Sixth product standard clarifies rules on care
Historically, if a customer moved into care in a formal setting such as a care home, the early repayment charge (ERC) was waived. However, the new Product standard expands this to waive the ERC if the person moves in with relatives to receive care and a medical practitioner’s certificate is provided.
With the number of people aged 85+ expected to grow by 62.7% by 2043, there is a need for older people to have access to flexible financial solutions in later life to support them through a number of circumstances. In this case, Council members upholding this standard will ensure that later life customers are safe in the knowledge that they can repay their loan when going into care without incurring additional costs.
All Council members are required to adhere to the standards and principles which safeguard customers by ensuring they are fully informed, and products and services adhere to best practice.
The Equity Release Council Product Standards are:
• Interest Rates: For lifetime mortgages the rate must be fixed for each release or, if variable, the rate must be capped for the life of the loan.
• Home for Life: 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.
• Option to Move Home: 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.
• No Negative Equity Guarantee (NNEG): 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.
• Ability to Make Repayments: 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.
• Long-term Care: If a customer needs to move permanently into long-term care – whether in a care home or with relatives providing care – any early repayment charge will be waived by the Lender upon receipt of a medical practitioner’s certificate and the terms and conditions of the loan have been met
Michelle Highman, chair of the Equity Release Council Standards Committee, commented: “Significant work went into refreshing the Standards with the aim to make them clearer, more accessible and more consumer focussed. Over a 12-month period, eight working groups went through the standards line by line before we consulted with our members and the wider industry to reach the final version. As part of this, we have developed a new product standard and unveiled our first Consumer Charter.
“Customers look to the Equity Release Council to give them confidence to explore whether accessing housing wealth is right for them and the Consumer Charter clearly outlines what they can expect from our members. We expect them to be able to trust in a tailored, thorough and transparent process that ensures they received the right outcome based on their individual circumstances.
“The Council and our members continually strive to grow our market and ensure that later life lending works for the greatest number of consumers possible. While equity release may not be right for everyone, for many it can be an essential lifeline to achieve the retirement they want and today’s launch means they can continue to do this with confidence.”
