The changes were developed with input from eight working groups and a consultation to ensure the standards are clear and accessible, while maintaining protection for consumers. These will be effective from 6 May and apply to its members.
The Consumer Charter is a document that members can use with customers to explain what to expect when working with an Equity Release Council member. This will give information on the process and ensure they are aware they should receive the right outcome based on their circumstances.
It builds on product standards released in 1991 and has evolved to establish trust in the market.
The sixth product standard clarifies rules on care and is an update of the previous practice of waiving the early repayment charge (ERC) if a customer moves into care in a formal setting, such as a care home. It has been expanded to waive the ERC if a person moves in with relatives to receive care, and a medical practitioner’s certificate is given.
The Equity Release Council said that with the number of people aged 85 and over expected to rise by 62.7% by 2043, there was a need for older people to have access to flexible financial solutions later in life. It said this standard would make sure later life borrowers would be able to repay their loan when going into care without incurring additional costs.
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All Equity Release Council members must comply with the standards, which also include a no-negative-equity guarantee, so if a client’s property is sold and fees have been paid, even if the amount left does not cover the outstanding loan, neither the borrower nor their estate will be made to pay more.
Clients also have the option to move home while maintaining their loan provider as long as the new property is accepted, the right to remain in their home for life or until they need long-term care, fixed rates for the life of the loan or capped variable rates, and processes to ensure they are able to make repayments.
Making the Equity Release Council standards clearer and consumer-focused
Michelle Highman, chair of the Equity Release Council Standards Committee, said: “Significant work went into refreshing the standards with the aim to make them clearer, more accessible and more consumer-focused. Over a 12-month period, eight working groups went through the standards line by line before we consulted with our members and the wider industry to reach the final version. As part of this, we have developed a new product standard and unveiled our first Consumer Charter.
“Customers look to the Equity Release Council to give them confidence to explore whether accessing housing wealth is right for them, and the Consumer Charter clearly outlines what they can expect from our members. We expect them to be able to trust in a tailored, thorough and transparent process that ensures they receive the right outcome based on their individual circumstances.
“The council and our members continually strive to grow our market and ensure that later life lending works for the greatest number of consumers possible. While equity release may not be right for everyone, for many it can be an essential lifeline to achieve the retirement they want, and today’s launch means they can continue to do this with confidence.”
More can be done
Will Hale, CEO of Air said: “We welcome the council’s commitment to reinforcing good practice across the sector, but standards alone are not enough. Air’s priority is to provide practical tools and resources, which advisers across all parts of the market, not just ERC members, can use to develop their businesses and to ensure the way they are serving over-50s customers is fit for purpose.
“Despite the well-intentioned efforts of the council, and a number of iterations of the standards, our experience suggests that there is still more work to be done if the sector is to fulfil its potential in helping customers appropriately use their housing wealth to support their wants and needs in later life.”
Paul Carter, CEO of Pure Retirement, said: “The release of the Equity Release Council’s updated standards underlines the later life sector’s commitment to self-development and to generating the best outcomes for consumers. The inclusion of a consumer charter is a fantastic addition to an area of financial services that already strives to consistently put customers first, and will hopefully afford consumers an additional sense of reassurance by the way it clearly sets out what those exploring their options should expect during the advice process.
“As a leading lifetime mortgage provider, we naturally fully support and welcome such initiatives and look forward to supporting the Council, advisers, and their clients wherever possible to ensure that consumers’ needs and interests are put first as they explore ways to meet their financial goals in later life.”
