Equity Release Council Refreshed Standards for Later Life

The Equity Release Council have refreshed their Standards for the Later Life Market and we are very proud to say that Viva Retirement Solutions have been lucky enough to play a role in this.

Director Paul Saroya sits on the Equity Release Council Standards Board and has said “The Standards Refresh has come at a time when the market has evolved considerably over a short period of time and reflects the changes needed to make sure that customers continue to get “Gold Standard” advice from adviser members. The addition of the Customer Charter spells out exactly what potential clients should expect from their interactions with advisers in the Later Life space and further enhances the Equity Release Council’s reputation for promoting the highest of standards.”

Paul will also be speaking in more detail about this at the Equity Release Summit in May.

The changes were made following input from eight working groups as well as a consultation with the focus being to make the standards clearer and more accessible while continuing to uphold the highest level of protection for consumers. 

As part of the standards refresh, the Council has launched a new Consumer Charter. The document, outlines what people can expect when working with an Equity Release Council member.  

This builds on the work which began when consumer-focused equity release product standards were first introduced in 1991. 

Sixth product standard clarifies rules on care

Historically, if a customer moved into care in a formal setting such as a care home, the early repayment charge (ERC) was waived. However, the new Product standard expands this to waive the ERC if the person moves in with relatives to receive care and a medical practitioner’s certificate is provided.

With the number of people aged 85+ expected to grow by 62.7% by 2043, there is a need for older people to have access to flexible financial solutions in later life to support them through a number of circumstances. In this case, Council members upholding this standard will ensure that later life customers are safe in the knowledge that they can repay their loan when going into care without incurring additional costs.

All Council members are required to adhere to the standards and principles which safeguard customers by ensuring they are fully informed, and products and services adhere to best practice. 

The Equity Release Council Product Standards are: 

• Interest Rates: For lifetime mortgages the rate must be fixed for each release or, if variable, the rate must be capped for the life of the loan.

• Home for Life: You must have the right to remain in your property for life or until you need to move into long-term care, provided the property remains your main residence and you abide by the terms and conditions of your contract.

• Option to Move Home: You have the right to move to another property subject to the new property being acceptable to your product provider as continuing security for your equity release loan.

• No Negative Equity Guarantee (NNEG): The product must have a 'no negative equity guarantee'. This means that when your property is sold, and agents’ and solicitors’ fees have been paid, even if the amount left is not enough to repay the outstanding loan to your provider, neither you nor your estate will be liable to pay any more.

• Ability to Make Repayments: All customers taking out new plans which meet the Equity Release Council standards must have the right to make penalty free payments, subject to lending criteria.

• Long-term Care: If a customer needs to move permanently into long-term care – whether in a care home or with relatives providing care – any early repayment charge will be waived by the Lender upon receipt of a medical practitioner’s certificate and the terms and conditions of the loan have been met.

If you would like to work with a team of equity release advisers who are committed to driving up the standards in the market, why not contact us today for a free no obligation consultation.