The council told Mortgage Solutions that it was also working on a number of initiatives which it hoped would raise advice standards across the market.
This week the FCA published a review of advice in the equity release market and found significant failings, highlighting that in some cases it “was not clear that the advice was in the best interests of the consumer”.
The regulator found three significant areas of concern about the suitability of advice provided, which it considered increased the risk of harm to consumers in the market:
- Insufficient personalisation of advice,
- Insufficient challenging of customer assumptions,
- Lack of evidence to support the suitability of advice.
ERC CEO Jim Boyd told Mortgage Solutions: “We are confident the council’s standards are robust and provide the highest level of consumer protection of any later life property-based loan.
“We regularly seek the regulator’s input, including during last year’s standards update, and will carry out a thorough review to ensure all council rules and guidance, supporting documents and resources reflect the FCA’s latest feedback.
“We would like to see all advice firms adopt these best practice standards for equity release and have already been working on a number of initiatives to support advice standards across the market, which will be published in the coming months.”
Independent legal advice
In its initial response to the FCA report, the ERC highlighted that the FCA had found equity release was “working well for many consumers”.
It said it would work with members and the wider market to make sure this was a universal characteristic, by developing and embedding best practice standards which it hoped all firms would sign up to.
“For context, equity release makes up fewer than two per cent of complaints about home finance products and, of 38 complaints made to the Financial Ombudsman Service in the last year, only two were upheld,” said ERC chairman David Burrowes.
“The combination of FCA regulation and Equity Release Council standards provides three levels of protection for customers, including independent legal advice alongside regulated financial advice and clear product safeguards.
“The requirement for customers to receive independent legal advice is unique among mortgages and helps to ensure customers understand the product and are under no duress or coercion to enter into the contract.”
He added: “It is vital that customers are supported to consider both long- and short-term needs when deciding whether equity release is right for them, as well as potential alternatives now and in future. The FCA’s findings will inform our ongoing work to support advice standards across the market.”