Equity Release Council
Who Are the Equity Release Council (ERC)?
The Equity Release Council is a non-profit organisation that was founded in 1991 to monitor the equity release sector,
Assuring a high level of goods and the safety of homeowners who are releasing equity from their estate.
Take note! You’re going to learn why equity release is actually risk-free.
With a troubled history marred by scandal and debt, equity release hasn’t always been the greatest option for retirees.
The question is, have things changed?
Through this article, you’ll learn:
- What is the Equity Release Council and how it works.
- The rules set out by the Equity Release Council.
- The measures taken to protect the equity release market.
We spent hours researching over 28 regulated plan providers, summarising the important work of the Equity Release Council, and compiling this detailed guide.
Do you want to know everything there is to know about the Equity Release Council?
Let’s get into it!
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What Does the Equity Release Council (ERC) Do?
The Equity Release Council1 is an organisation set up to promote safe and fairly managed equity release products.
The ERC aims to safeguard the interests of homeowners and boost public confidence in equity release.
What’s the Equity Release Council Code of Conduct?
The Equity Release Council’s Code of Conduct is:
- Ensuring that their efforts to encourage public trust in equity release as a viable retirement alternative.
- Acting in good faith at all times.
- In all of their transactions, communicating high expectations for the outcomes of the equity release plan.
What Standards Does the Equity Release Council Set?
The Equity Release Council sets the standard of fairly managed equity release products by ensuring each member of the Council is aligned with its overarching principles.
The overarching principles specify members will abide by the following set of standards:
Overarching Principles of the ERC
The overarching principles of the ERC is that all equity release companies must behave in good faith at all times, with their consumers’ best interests at heart.
Required Customer Outcomes as Laid Out by the ERC
The required customer outcomes as laid out by the ERC provides clients with products and services that best meet their demands, and that are reasonably priced.
It’s essential that all points of contact members will endeavour to identify and give appropriate help to clients who may be exposed to physical, emotional, or financial vulnerability.
Product Standards Set Out by the ERC
Product standards set out by the ERC are there for when you’re providing or contemplating a product that doesn’t satisfy all criteria.
In that case, the accompanying documentation must clarify which standards are not met and give you an understanding of the sorts of risks you face.
How Does the Equity Release Council Safeguard Homeowners?
The Equity Release Council safeguards homeowners with the following promises:
You Can Live In Your Home as Long as You Like
If you follow the contract’s provisions, you can live in your house for as long as you like, until you die or enter long-term care2.
You Can Move Home if You Want To
If the property fits the provider’s standards, you can move and use your new house as collateral for the loan.
You Pay a Fixed or Variable Interest Rate
If you have a lifetime mortgage, you’ll pay a fixed or variable interest rate for the loan duration.
If the rate is variable, it should be capped, which means it cannot exceed a set threshold.
You Get a No-Negative Equity Guarantee
You receive a no-negative equity guarantee.
If your house is sold and the proceeds are insufficient to satisfy the loan repayment plus interest, you or your beneficiaries will not be required to pay the difference.
What Organisations Are Part of the Equity Release Council?
The following organisations are part of the Equity Release Council:
With equity release, financial advisors are part of a fundamental service offering.
When releasing equity from your property, the FCA3 requires you to obtain financial advice as a client.
Solicitors’ organisations are also part of the ERC.
Their responsibility is to ensure that you comprehend the long-term nature of an equity release arrangement and proceed with a complete understanding of the risks and advantages.
A provider is a corporation that offers retirement mortgages that can be lifetime Mortgages, home reversion plans, or retirement interest-only mortgages.
The associate is a broad category that includes businesses that have a vested interest in collaborating with the other organisations mentioned:
- Network and Clubs
- Information and Support
Affiliate companies interested in the UK equity release market, such as Equitable Bank, a Canadian challenger bank, are affiliate members (a new bank that challenges the longer established banks).
How Does a Company Become a Member of the Equity Release Council?
In order to become a member of the Equity Release Council you need to submit an application.
A corporation must go through a thorough application process and demonstrate that they have procedures in place to satisfy the ‘Statement of Principles’.
Furthermore, they must adhere to the ‘Required Consumer Outcomes,’ and be able to follow the ‘Rules and Guidance.’
How Often Are Members Reviewed?
Members are reviewed on the anniversary of their admission of membership.
All members are expected to complete and submit an annual certificate of compliance, including rules and guidance.
How Does the ERC Ensure Compliance With Its Policies?
The ERC ensures compliance with its policies by checking when a firm joins that it completes a ‘Yearly Certificate of Compliance,’ which must then be renewed on an annual basis.
This serves as a declaration by a director that the criteria are being followed, which holds them accountable.
How Does the Equity Release Council Handle Complaints About a Company?
The Equity Release Council handles complaints about a company with a solid internal procedure.
They will involve appropriate regulating authorities if necessary.
The firm should be allowed to reply and, where feasible, make things right through their own complaints system before the Council looks into them.
What Enforcement Action Can the Equity Release Council Take?
The Equity Release Council can take enforcement action with its right to conduct an investigation.
It will disclose its findings to the relevant regulatory agency and expel the offending entity from the ERC.
How Do I Know an Adviser or Provider Is a Member of the Equity Release Council?
To know if an advisor or provider is a member of the Equity Release Council, you can use the Equity Release Council’s member search.
The Equity Release Council endorsement mark is only available to members.
Furthermore, you can ask the lender or look for a logo on their website.
Does My Equity Release Provider Need to Be an ERC Member?
It’s a very good idea to have a provider that’s a member of the ERC, just to ensure that your finances are safeguarded and for your peace of mind.
What Does the Equity Release Council Protect Me From?
The Equity Release Council protects you from:
- Plan providers who don’t have a ‘no negative equity guarantee.’
- Lenders who aren’t members of the ERC.
- Providers who charge high interest rates.
- Lenders who charge you very high repayments and who charge them early.
- Equity release firms that give you large loan amounts before they even analyse your circumstances.
When it comes to releasing equity from your home, we strongly advise you to work with the Equity Release Council member.
After all, one of the ERC’s primary guiding principles is to protect you and your future.
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