The list builds on the council’s rules and guidance which came into effect on 1 January and follows criticism from the Financial Council Authority (FCA) which found, in some cases, advice was not always in the best interest of the client.
The checklist prompts advisers to recommend that customers review or set up a will and seek advice from a solicitor or qualified person if they do not have a Power of Attorney.
It also stresses the importance of establishing if a customer has experienced difficulties with their physical or mental health, bereavement, divorce, emotional or financial issues, literacy, numeracy, or any other traumatic event, that may make them vulnerable.
Where a customer is remortgaging onto a lower interest rate or to release further capital, it is advised that a detailed analysis of features and benefits are laid out to compare both the existing and new plans.
Advisers must also establish a client’s eligibility for state benefits, ensure the amount released does not exceed requirements and make sure the client has a realistic expenditure budget plan.
The ERC has also asked advisers to fully discuss equity release alternatives and whether they will be relevant now or in the future.
The checklist is designed to be an addition to the fact find and suitability reports.
Chris Pond (pictured), chairman of the ERC’s standards board, said: “This updated checklist captures the most important points to cover from FCA regulations and Equity Release Council standards.
“The update will help address subsequent feedback highlighted in the regulator’s recent review of the sales and advice process by helping advisers to understand, fulfil and demonstrate the specific needs of each and every customer.”
He added: “We encourage customers who are considering releasing equity to use a council member, to benefit from these extra protections and safeguards. We also call on more advice firms to sign up to these best practice standards.”
