The Equity Release Council set up a working group at the start of 2021 to examine ways of improving post-completion communication between lenders, advisers and borrowers.
As part of the council’s next standards update in January, guidance will be introduced that focuses on potential changes to customers’ circumstances throughout the lifetime of their loans.
Additional guidance covering borrowers who want to switch plans will follow in 2022.
Under current Mortgage Conduct of Business (MCOB) rules equity release providers have to send an annual statement to borrowers which lays out their loan amount, interest accrued, when early repayment charges end, their value and the cost of redeeming the lifetime mortgage.
Equity release advisers are not required to keep in contact with their customers after the loan has completed.
Stuart Powell, managing director of Ocean Mortgages, wants the Equity Release Council to act sooner to encourage advisers to carry out regular plan reviews.
“I think that it’s great that the Equity Release Council realises there’s a need for them to give guidance on this issue,” said Powell. “They often feel that a working party is the best way to go, however, this process can take a long time to bear fruit. The market needs some guidance now.”
Powell wants firms that have completed an equity release loan with a customer to conduct a regular review of their client’s circumstances every two years.
He added: “Where the council will succeed is in giving its members guidance on what a review should look like, how to calculate the benefit of switching to a new deal, or identify when it is not in the client’s interest, and ensure that the process and the advice given is uniform.”
Jim Boyd, chief executive of the Equity Release Council, said: “It is important that communication between customers, advisers and lifetime mortgage providers continues after the initial completion of the mortgage. Equity release products are designed to be long-term commitments while also allowing for the fact that customers’ circumstances may change, with options to repay early or port your loan to a new property when you move.”