Equity Release Council

Established in 1991 and initially called ‘Safe Home Income Plans’, SHIP as it was known, became The Equity Release Council when it changed its name on 8th May 2008.

With consumer safeguards at its core, The Equity Release Council (ERC) is a voluntary trade body for the Equity Release sector. It represents over 400 members including providers, qualified financial advisers, solicitors, surveyors and other industry professionals, and seeks to make Equity Release a mainstream product for the UK.

Since 1991 over 350,000 consumers have taken out an equity release plan through the council drawing almost £17bn of equity from their homes. If you want to find out exactly what the Equity Release Council does, how it enforces its standards and what protection it gives you then keep reading…

What does the Equity Release Council do?

The Equity Release Council works to make sure there’s a safe environment for consumers considering and using Equity Release. It sets high standards for the advice given and the products used, which gives consumers confidence in the sector and their ability to release equity safely from their homes. 

The Council also works with consumers, industry and policymakers to raise awareness and understanding of Equity Release, and the potential for housing wealth to help people over the age of 55 across the UK.

What organisations are part of the Equity Release Council?

Because the Equity Release Council represents the whole of the Equity Release industry, it sets standards for all organisations that are involved through the whole process. It is worth noting that you won’t necessarily encounter all of these bodies when you go through the process of Equity Release, but all the channels are covered by the Council.

Advisors

Financial Advisors are part of a core service offering with Equity Release. As a customer, you are required by the FCA to seek financial advice when releasing equity from your home. Companies that are part of the Equity Release Council are required to adhere to the ‘Statement of Principles’ which adds further layers of protection for consumers ensuring they meet the ‘Required Customer Outcomes’.

There are two models of advice aimed at protecting consumer interests, ‘Face-to-Face’ and ‘Telephone Advice’. With Face-to-Face advice a qualified advisor will travel to you or vice versa and offer advice with family members present at your discretion. Telephone Advice is given by a qualified advisor over the phone with call recording, data storage and appropriate monitoring procedures in place.

Solicitors

To make sure the customer gets truly independent advice and conflicts of interest are avoided, it is a requirement of the ERC that the customer and the Equity Release provider have separate legal representation from a solicitor.

The role of the homeowner’s solicitor is to make sure they understand the long-term nature of an Equity Release contract and proceed with full knowledge of the risks and benefits.

The product providers have their own independent legal representation – their legal representative’s job will be to verify that the provider is able to achieve a first legal charge over the property on which the loan is being taken out.

Providers

A provider is a company that provides the Lifetime Mortgage or Home Reversion Plan.

The Council specifies Product Standards that it’s members’ products have to comply with. Although providers can still offer products that don’t comply with all of the Standards, as long as this is clearly explained to the customer.

Associates

Associates is a broad umbrella that covers companies with a vested interest in working with the other organisations mentioned:

• Surveyors – Surveyors play an important role in the Equity Release market appraising properties on behalf of product providers/lenders.
  
• Funders – Are an important part of the market. They help dictate rates, structure and features of financial products.
  
• Network and Clubs – Offer support to various professionals within the industry for things like application submissions, file checks, etc.
  
• Information and Support – Provides key resources for advisers and lenders, things such as back office support and benefits calculations.
  
• Introducers – Introducers and referral partners help match customers with advisers and ultimately providers.
• And all other organisations that don’t fall under any other categories

Affiliates

Affiliate members are companies with an interest in the UK Equity Release market, for example, Equitable Bank, a Canadian challenger bank (new bank that challenges the longer established banks).

What standards does the Equity Release Council set?

The ERC lays out explicit principles and guidelines that set the standards for companies to adhere to as well as giving customers the protection they need.

Overarching Principles of the ERC

• Members will ensure that all their actions promote public confidence in Equity Release.
• Members will act at all times in utmost good faith, with the best interests of their customers being paramount, by treating customers fairly in all their actions.
• Members will ensure conflicts of interest are identified swiftly and managed fairly.
• Members will seek to deliver suitable outcomes for customers from initial sale through every point of contact during the life of the product.

Members must comply with all statutory regulations. Members must also comply with the ERC principles, required consumer outcomes, and rules and guidance.

Required Customer Outcomes as laid out by the ERC

Members will provide advice, information and professional services that are clear, transparent and impartial:

• They will offer customers the products and services that suit their needs best and which are fairly priced.
• Members will seek to identify and provide appropriate support to customers who may be exposed to physical, mental and financial vulnerability at any point of contact.
• Customers will be confident that they will be able to live in their own home for as long as they wish, or move to a suitable alternative property, as long as they abide by the terms and conditions of their contract.
• Members will do their best to make sure that customers understand their rights and responsibilities at every point of contact.

Product Standards set out by the ERC

• For lifetime mortgages, interest rates must be fixed or, if they are variable, there must be a “cap” (upper limit) which is fixed for the life of the loan.
• 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.
• 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.
• 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.

Members are only allowed to tell you that a product meets these standards if it meets all of them.  

If you are offered or are considering a product that does not meet all of the standards, the accompanying literature must explain which standards are not met, and give you an idea of the types of risk this poses for you.

If you’re considering equity release and would like to know more, we’ve put together this article to help you understand what interest rate you could potentially achieve on equity release.

How does the Equity Release Council protect consumers?

As well as the principles and guidelines laid out above, to help you understand how you’re protected, let’s have a look at one of the core principles guiding the rules and regulations, which is rule 3.3: 

‘Customer vulnerability is not static and can evolve or change over time’. Vulnerability Triggers may include:

1. age, physical or mental health
2. low literacy, numerical and language skills
3. redundancy, relationship breakdown or bereavement
4. medical condition or illness including addiction
5. financial difficulties including financial abuse
6. coercion from a third-party or a power of attorney acting for the customer who has not received independent financial advice
7. loneliness and/or lack of support.

For a company to be a part of the ERC, they have to have the ability to identify and respond to changes in customer vulnerability throughout the term of the product and ensure that you the customer are protected from the above. 

Another layer of protection from the ERC is that providers are not allowed to take on ‘execution-only’ business. Sales must always be advised with a personal recommendation in order to prevent mis-selling. 

How does a company become a member of the Equity Release Council?

Access to the ERC is on application only. A company most go through an extensive application process and prove that they have systems in place to follow the ‘Statement of Principles’ as well as adhere to the ‘Required Consumer Outcomes’ and be able to follow the ‘Rules and Guidance’

There is also an administration fee payable annually which varies depending on the size and type of organisation, see tables below:

Financial Advisors

Size	Advisors	Fee (per head, per annum)
Small	1 – 9	£300
Medium	10 – 49	£250
Large	50 – 199	£200
Major	200	£195
Please Note: An application fee of £70 is also payable for each individual associated with the application

Solicitors – Fees are based on caseload volume at time of application

Cases	Fees (per annum)
Up to 499	£450
500 to 2,499	£2,500
2,499 to 9,999	£3,500
10,000 – 19,999	£5,000
20,000+	£10,000
Please Note: An application fee of £70 is also payable for each individual associated with the application

Associates

Due to the range of member types available in this category, each application is reviewed and costed on a case by case basis.

How often are members reviewed?

All Members are required to complete and submit an Annual Certificate of Compliance with the Rules & Guidance on the anniversary of their admission as members of the ERC.

How does the ERC ensure compliance with its policies?

In the first place, when a company joins and then on an annual basis, they have to complete an ‘Annual Certificate of Compliance’. This is a declaration from a director that the guidelines are being adhered to, making them responsible.

Although Equity Release is perfectly viable, and a suitable option for a lot of people there are instances where you may not need to go through the process. We’ve put together a guide on ‘Alternatives to Equity Release’ that shows what other options you have.

How does the Equity Release Council handle complaints about a company?

The ERC has a robust internal system for dealing with complaints and for escalating them to the relevant governing bodies should it be warranted. It might not be obvious, but it can only deal with complaints against organisations that were members of the ERC at the time of the incident. 

In the first place, the company should be given the chance to respond and where possible put things right using their own complaints procedure before the Council looks into them.

Complaints about advisors or providers

When the complaint involves a lifetime mortgage or a home reversion plan, or, the advice received during the sale of a plan, the complaint should first be referred to the advisor or provider concerned. 

Under the FCA’s rules, the first thing the firm must do is acknowledge your complaint and investigate it fully.  It must then send you a “final response” within 8 weeks of receiving your complaint. That final response must:

• Tell you that the firm accepts your complaint and explain what action it is now going to take to redress it; or
• Tell you that the firm does not accept your complaint but is prepared to offer you some redress; or
• Tell you that the firm does not accept your complaint and explain why. It must also explain to you that you now have the right to take your complaint further, to the Financial Ombudsman Service (see below for more details).
• If the firm has not been able to come to a decision about your complaint within the 8-week timescale, the final response must explain why this is the case and tell you when the firm does expect to be in a position to give you its decision.  It must also tell you that you may now go directly to the Financial Ombudsman Service without waiting any longer.

Complaints about Solicitors

When the complaint involves advice or service from a solicitor, you should raise it with the person handling your case.

• If this doesn’t resolve the issue, you should write to the firm’s Managing Partner to make sure your complaint is formally dealt with under the firm’s complaints handling procedure.
• The Managing Partner will send you a written copy of that procedure, explaining the steps that will be taken to investigate your complaint and the timescales within which you can expect to receive a response.
• You might be asked to attend a meeting to discuss your complaint.
• When the firm has completed its investigation, the Managing Partner will write advising you of the firm’s decision.
• If your complaint has been upheld, the Managing Partner may make some suggestions as to how to resolve the issue (like waiving some costs).
• If your complaint hasn’t been upheld, and you remain unhappy, the Managing Partner should advise you that you are entitled to raise a formal complaint with the Legal Ombudsman and explain how you may do this. (The Legal Ombudsman will only consider complaints from the public where the firm’s own complaints handling procedure has been followed).

Complaints about Surveyors

When the complaint involves services from a surveyor, your surveyor must provide you with a written copy of their complaints procedure.

If you have a complaint about a surveyor who surveyed your property in connection with your Equity Release plan, you should first raise your dispute with that individual.

• If you remain unhappy, you should write to the Managing Director, Chief Operating Officer or the Senior Partner of the surveying practice, setting out the details of your complaint.
• Once the firm has received your complaint in writing, you should receive a written acknowledgment within 5 working days.
• 10 working days after the firm has received your written complaint, the person dealing with it should write to you informing you of the outcome of the firm’s investigation and what actions are being proposed.
• If you are unhappy with any aspect of the handling of the complaint you can refer it back for a separate review.
• The company will write to you within 14 working days to notify you of the conclusions of this separate review. 
• If the complaint has still not been resolved to your satisfaction then there are two possible courses of action:
  1. if the firm concerned subscribes to the service offered by the Ombudsman Services: Property, you may refer your complaint there.
  2. if the firm does not subscribe to this service, you can ask the Royal Institute Chartered Surveyors to appoint an independent adjudicator to investigate the complaint for you.

When complaining to the ERC, it’s important to demonstrate which rules and guidance were broken and the detriment it’s caused to you, both financial and non-financial. 

You can access the ERC complaints and disciplinary process here

What enforcement action can the Equity Release Council take?

Where applicable, the ERC will investigate and report its findings to the appropriate regulatory body and remove the offending firm as members of the ERC.

Can the Equity Release Council help me get my money back if I’ve been ripped off by a company?

The Council is not able to adjudicate on complaints brought by customers which are not within the Financial Ombudsman Service’s scope.

Who currently sits on the board of the Equity Release Council?

The equity release council members are:

	Name	Title
	Claire Barker	Equilaw, Solicitor Representative
	Will Hale	CEO, Key
	Paul Barber	Chief Executive, Retirement Bridge Management Ltd
	Paul Turner	Managing Director, Retail of Just Group
	Dan Baines	Managing Director, Equity Release Associates
	Dave Harris	CEO, more2life
	Paul Carter	CEO, Pure Retirement
	Claire Singleton	CEO, Legal & General Home Finance
	Tom Evans	MD, Canada Life Home Finance
	Vanessa Owen	Vice President, Private Markets UK of Reinsurance Group of America
	Matthew Burton	Managing Director, Mortgages at Hodge
	Donna Bathgate	Chief Operating Officer, Equity Release Council
	Jim Boyd	Chief Executive of the Equity Release Council
	Chris Pond	Standards Board Committee Chairman, Equity Release Council
	David Burrows	Chairman of the Equity Release Council

My adviser assures me he is qualified in Equity Release: what should I be looking for?

Giving advice on Equity Release products is a regulated activity – which means you have to be authorised by the FCA to give that advice. Because the FCA requires the adviser to have the appropriate profession qualifications, there are a number of things you can look out for:

• CeRER (Certificate in Regulated Equity Release) – From the Institute of Financial Services (IFS)
• CER (Certificate in Equity Release) – From the Chartered Insurance Institute (CII)
• ERMAPC (Equity Release Mortgage Advice & Practice Certificate) – From the Chartered Institute of Bankers in Scotland.  

This list is not exhaustive and there are other qualifications which are relevant

Although members of the ERC have built their businesses around helping people, there are companies out there that act in dishonest and fraudulent ways, we’ve put together this short guide on things to look out for when it comes to choosing an advisor.

Does the Equity Release Council endorse any plans that comply with Sharia Law?

Sharia law prohibits the concept of borrowing and paying interest on loans: conventional residential mortgages, therefore, present a problem for consumers who wish to observe Sharia law strictly.  

There are at present no Sharia-compliant lifetime mortgage products – since these work on the basis of interest being charged to the borrower’s account and rolled up for payment at the point where the property is sold.  

Home reversion plans are more likely to be suitable for consumers who wish to release equity in a way that is compliant with Sharia law, since a proportion of the borrower’s property is sold, and there is no loan involved.

There are also 2 methods of home purchase that are compliant:

Murahaba	Ijara
The bank buys the property and sells it back to the customer at a higher price.  The customer then pays the higher price by way of paying equal instalments, over a fixed term.	Ijara – this is more common: the bank buys the property and sells it back to the customer – on a leasehold basis – so the customer pays rent for a fixed period, at the end of which the (freehold) property becomes the customers. The amount of rent paid each year is assessed according to market rates, not prevailing interest rates.

 

Are you considering Equity Release?

When it comes to releasing equity from your property, we highly recommend choosing a provider that is a member of the Equity Release Council. 

Details correct as of 21st December 2021.