The Equity Release Council has released a new set of updated industry standards aimed at ensuring higher levels of consumer protection.
The Council has claimed the latest changes, which will take effect from the start of January 2020, are the most significant shake up to standards and regulations since its launch in 2012.
The updates represent a year of extensive consultations involving organisations like the Financial Conduct Authority (FCA), HM Treasury, Money and Pensions Service, solicitors and surveyors.
The new standards will now ensure 300 member firms and 1,000 registered individuals will adhere to the changes aimed at ensuring equity release customers are fully protected, especially vulnerable customers.
The Council claim their standards ensure that customers are protected more than any other form of property-based loan.
Greater protection has also been put in place to protect consumers borrowing equity in later life in the hope of protecting their quality of life in retirement.
Customers exposed to physical, mental and financial vulnerability will enjoy greater protections through ‘three levels of protection, encompassing a structured financial advice process; clear product safeguards; and independent face-to-face legal advice.’
Encouraging independent legal advice has been deemed extremely important in assessing the mental capacity of a consumer before they take out the loan in their home. A more rigorous process will also prevent customers from taking out an equity release product under duress.
Chris Pond, chair of the Equity Release Council’s Standards Board, said:
“The standards are fundamental to the Council’s work to lead a customer-focused market, and the launch is an important milestone in nearly thirty years of protecting consumers’ interests.
“The aim of the review was to ensure that the standards reflect emerging trends in regulation and are future proofed for a world where retirements needs are constantly changing.
“The renewed focus on principles and outcomes alongside existing rules and guidance will help to ensure that equity release products and services continue to meet customer needs. The standards which Council members commit to, above and beyond their regulatory duties, provide the ultimate reassurance to consumers that equity release products are safe and reliable.”
David Burrowes, Chairman of the Equity Release Council concludes:
“The UK population is ageing rapidly, and people are having to make increasingly complex decisions over longer lives in retirement. Elderly consumers face a wide range of products and services to meet different and often competing needs – from providing additional retirement income and meeting the costs of care to providing early inheritance to family and friends.
“Today’s landscape demands a joined-up approach to later life financial planning that considers all wealth and assets. Longstanding provisions for equity release customers, such as the guarantee of independent legal counsel, have set a high benchmark for delivering advice in the later life arena. Our updated standards build on these guarantees to ensure they are fit for modern day purposes. They recognise that the best outcomes can often be achieved in different ways, by combining clear rules with overarching principles which all members sign up to. These will continue to evolve in future to meet the ever-more complex challenges facing consumers.”
How susceptible are vulnerable people to financial abuse? Will these improved standards reduce the chances of vulnerable consumers being exploited?
