Concerns were sparked after an occupier form posted during November took 12 days to reach the lender after being held up by strike action and the knock-on effect of disruption that spills over onto non-strike days.
An occupier form needs to be signed by anyone over the age of 17 who lives in the property of the equity release borrower, but is not a legal owner. They must receive independent legal advice from a solicitor not related to the transaction. They will be advised that in signing the form they are giving up any rights or interest in the property. If the loan and interest is not repaid, occupiers agree to leave the property at the end of the lifetime mortgage, when the borrower dies or moves into long-term care.
Most lenders insist that the form is posted to them, via the borrower’s solicitor, so they have the original signatures of the occupier on their records.
In some cases, this can mean the form is put in the post three times.
Postal strikes hit equity release borrowers
With heavy postal strike action planned for December, freelance solicitor Joanna Walker, who provides independent legal advice, fears that borrowers who need to get their funds before Christmas will be let down.
“These are unprecedented times,” she said. “We have a cost of living crisis coupled with a relentless timetable of successive postal strikes.
“During lockdown the equity release industry found a solution to the challenges of social distancing. It’s important now that we find an alternative to physical posting.
“Lenders’ insistence on receiving original wet ink occupier forms seems almost Dickensian to me. I can’t see any reason why lenders cannot accept occupier forms in electronic form, by photograph or PDF scan. After all, they are not a requirement of the Land Registry. For the sake of borrowers, we need to find a more efficient way of working.”
There are seven days of industrial action planned next month falling on 1, 9, 11, 14, 15, 23, 24 of December.
Walker says there is a real risk that, if lenders insist on physical posting, occupier forms sent after this date may not arrive in time for a pre-Christmas completion. She says the need for an occupier form arises in around one in seven equity release cases.
Although she acts for the occupier and not the borrower, it is the borrower who is responsible for paying her fee. Her fee for online advice fee is £150.
“Borrowers are telling me that their finances are too tight to pay my fee upfront and ask to defer my payment until completion,” she added.
“They often express an urgency to complete in order to avoid repossession, to settle debts, to pay bills or assist family members. Equity release is often described as their ‘only option’ or ‘the last resort’.”
Walker has asked the Equity Release Council to intervene and help persuade lenders to change their processes.
Couriers and e-signatures could help
The council says that the processes put in place during the pandemic were exceptional and only implemented after cross-industry talks with legal firms, providers and third parties involved with the transactions. The changes weren’t made to speed up transactions but to allow homeowners to continue to access equity release if they needed it.
Kelly Melville-Kelly, head of risk and compliance at the Equity Release Council, said: “We appreciate many people are under significant financial pressure in the current climate and will be concerned about the outlook for next year. At the same time, equity release is a long-term commitment which must be carefully considered, supported by advice from a council member and wider family discussions.
“Some firms have used couriers effectively to counter the temporary, short-term disruption of Royal Mail strike action and recouped the costs from the Royal Mail’s compensation scheme, without delaying customers’ completion times on their loans. Any customer concerned about the impact of next month’s postal strikes should discuss this possibility with the firms involved.
“Wider use of e-signatures are also being looked at by some providers on certain documents; however, such changes need time and care to implement effectively, so the right protections are in place and the risks of fraud are managed appropriately.”
