The ERC said that this showed the commitment to “maintaining and improving standards, with the combined insights designed to educate the later life lending sector and the wider legal profession as to the vital role legal firms play in supporting customers in this market”.
The legal guide can be found here: https://www.equityreleasecouncil.com/documents/legal-guide-to-equity-release/
The report looked at a sample of more than 300 cases from the last year in which a customer was flagged as vulnerable.
The research finds that 44% highlighted health and 23% pointed to capacity issues as vulnerabilities shown in the legal advice process.
In almost a quarter of cases from the legal adviser where vulnerability was identified, more than one vulnerability was identified.
Of those where it was not possible to proceed, a quarter of these were due to capacity and health respectively, duress accounted for 16% and undue influence was 10%.
More than three-quarters where the client was flagged as potentially vulnerable were able to proceed with additional support.
‘Guide will help to ensure a common understanding’
David Burrowes (pictured), chair of the ERC, said: “Independent legal advice is an essential part of the process of releasing equity, and it is vital we have the knowledge and skills in place across the legal sector to reflect and support the modern market.
“Our new guide will help to ensure a common understanding of the role of legal advice and its contribution to ensuring good consumer outcomes. It will also challenge more firms to consider whether they can offer this service to customers and what lessons they might learn from those who already successfully operate in this space.
“Meanwhile, our members’ insights, gleaned from supporting vulnerable consumers, show the benefit of involving specialist legal advice in important financial decisions, particularly in later life, when customers can be more prone to vulnerability.
“Equity release can be a transformative financial product [that], when used appropriately, can provide an important lifeline for pensioners, improve living standards and enhance the lives of their families.”
Customers ‘more likely to be vulnerable’
Carol Nuttal, managing director at Adlington Law, said: “Moving a client from being interested in potentially releasing equity to eventually taking the product out is a team effort and, too often, the vitally important role that the legal profession plays goes unacknowledged. We are therefore delighted to see the launch of this guide, which is designed to build understanding amongst the wider sector and encourage more firms to offer this service to their clients.
“With the typical equity release customer being almost 70 years old, there is no doubt that they are more likely to be vulnerable than some other age groups. Therefore, it is vitally important that they have someone whose sole purpose is to advocate on their behalf. Whether they are dealing with health or capacity issues or there are concerns about duress, their independent legal adviser works to ensure they understand the choices they are making and they are in their best interests.
“This is a service that is unique to equity release and highlights the commitment of the industry to ensuring that there are enhanced safeguards in this sector.”
Claire Barker, chief executive officer at Equilaw, said: “The launch of the Legal Guide to Equity Release is a significant step forward for the industry, and our hope is that it inspires best practice from lawyers who want to work in the equity release sector.
“Lawyers need to be aware that, far from being a simple remortgage, equity release transactions require them to advocate on behalf of their client and ensure customers fully understand the implications of their choices as well as the product details.
“There are many other factors in play, all of which are signposted within the guide, which has been designed to be an ongoing point of reference. This will be particularly useful for those who are new to the market and may be unused to the specific requirements involved with later life lending products.”
Last month, the ERC launched a handbook with Fairer Finance.
