From 1 March, the council will introduce new equity release standards to mandatory payment lifetime mortgages to further protect borrowers.
Its standards will also require advisers to include income and expenditure as part of the advice process. The ERC said that, while this already happened in many advisory conversations, it wanted to ensure this was consistently delivered.
Members of the ERC must adhere to its standards, which aim to make sure products and services meet best practice.
The most recent updates to the standards included the no negative equity guarantee and the ability for new borrowers to make penalty-free partial repayments.
Significant innovation in equity release
Michelle Highman, chair of the Equity Release Councils Standards Committee, said: “The council’s standards have been vital to the development of a vibrant market, but it is important that we regularly review them and consider how we best serve customers as well as support innovation within this sector.
“The council is therefore undertaking a thorough review in 2024, with input from members, stakeholders, and other interested parties. The evolution of our standards is key to helping the market continue to grow and ensure that the diverse customers who choose to access their housing equity can do so with confidence.”
Kelly Melville-Kelly, director of risk, policy and compliance at the ERC, added: “As a market, we have seen significant innovation and change over the last few years, and it is vitally important that we ensure our standards continue to evolve.
“The updates that we have announced today are just a start, and we will shortly be launching a wider review and seeking input from members as well as wider industry stakeholders. This will be a wide-ranging refresh that will look at not only the standards themselves but how they are communicated to customers to ensure that they provide the best protection possible.”
‘Driving forward best practice’
Craig Brown, CEO of Legal and General (L&G) Home Finance, said the ERC had an “unrivalled reputation for driving forward best practice and ensuring the best outcomes for customers”.
He added: “The council’s continued oversight gives homeowners the assurance they are properly protected when they access the value held in their homes, and by evolving industry standards, such as the changes announced today, the ERC is continuing to make sure customers remain at the heart of everything we do as an industry.
“L&G Home Finance has always worked closely with the ERC, and we’re delighted the council’s introduction of new standards on mandatory payment lifetime mortgages recognises innovations, such as our recently introduced payment term lifetime mortgage (PTLM), a first-of-its-kind product designed to improve the options for borrowers over 50.
“The council’s announcement today gives customers the peace of mind that comes with its endorsement when considering new products, but also sends a signal to the industry that product innovations such as this, rooted in customer need, are important for the sector’s continued evolution. We’re delighted to have led on this change and will continue to work closely with the ERC in our shared goal of continued progress for customers.”
Kay Westgarth, director of sales at Standard Life Home Finance, added: “The new guidance from the ERC demonstrates the sector’s commitment to delivering good customer outcomes.
“In particular, the need for advisers to show that all alternative options have been considered will be pivotal in ensuring borrowers receive a personalised service that is tailored to their individual needs – even if this means advising a customer away from a later life product to a more suited solution. However, with the suite of lifetime mortgage options becoming increasingly diverse, more and more options are opening up for over-50s in this part of the market.”
