Equity Release Council Reinstates Compulsory In-Person Legal Advice for UK Borrowers

The ERC Has Reinstated Face-To-Face Legal Advice for UK Homeowners Seeking Equity Release. Learn Why This Is So Important…
  • Last Updated: 30 Jan 2024
  • Fact Checked
  • Our team recently fact checked this article for accuracy. However, things do change, so please do your own research.

Contributors:

Francis Hui

Key Takeaways

  • In-person legal advice is crucial for equity release returns as it ensures an accurate understanding of terms, minimises risks, and helps safeguard your financial interests.
  • The compulsory nature of this advice influences equity release returns by necessitating clarity on repayment methods, interest rates, and potential impacts on inheritance.
  • Legal advice is mandatory for equity release returns in the UK to prevent miscommunication and protect the financial wellbeing of older homeowners.
  • The impact of legal advice on equity release returns can be significant, potentially saving you from unfair interest rates, hidden fees, and unforeseen financial pitfalls.
  • While some providers may offer remote consultations, obtaining equity release returns without in-person legal advice is typically not recommended due to the complex nature of the agreements.

Compulsory in-person legal advice returns for equity release in the UK in response to concerns that telephonic or online advice may not provide sufficient protection or support for homeowners.

Face-to-face equity release legal consultations were paused during the Covid-19 pandemic.

In April 2022, the Equity Release Council reinstated its mandatory requirement of at least 1 in-person consultation for borrowers with an independent solicitor.1

At Every Investor, our team of experienced professionals specialises in equity release and lifetime mortgages, and we provide reliable and up-to-date information to help you make informed decisions. 

In This Article, You Will Discover:

    Let us explore the reasons behind the decision and the potential benefits for homeowners looking to release equity from their homes.

    What Are Equity Release Loans?

    Equity release, is a financial strategy for individuals over 55, allowing them to withdraw cash from their home's equity.

    This option is useful for supplementing retirement income without needing to downsize.

    The funds from the equity release loan can be received either as a lump sum or in smaller, ongoing amounts.

    However, it's important to note that the loan, plus any interest, is usually repaid from your estate upon your passing or when you enter long-term care.

    What Is the Requirement for Compulsory In-Person Legal Advice for Equity Release in the UK?

    In the UK, it's mandatory to seek legal advice before finalising an equity release plan.

    This face-to-face consultation ensures you comprehend the arrangement’s potential impacts on your estate.

    It is a protective measure to avoid future disputes, misunderstandings, and potential financial pitfalls.

    This advice should come from a solicitor who is independent of the equity release provider to ensure unbiased input.

    The legal professional must have a deep understanding of equity release schemes and their implications.

    They should explain all the legal jargon and terms involved, discuss the potential risks and benefits, and clarify how the equity release might affect your estate and your beneficiaries.

    This compulsory in-person legal advice is not just a box-ticking exercise but a vital step to protect consumer interests.

    Is Equity Release Legal Advice Compulsory?

    Yes, equity release legal advice is compulsory in the UK. 

    In fact, the Equity Release Council stipulates in its rules that anyone entering into an equity release agreement must get independent legal advice.2

    Why Is Legal Advice Essential With Equity Release?

    Legal advice is essential with equity release because it helps homeowners understand the legal implications of the arrangement between them and the provider. 

    It also protects their interests and ensures that the legal obligations of both parties have been explained and are being met.

    Why Did the Equity Release Council Reinstate In-Person Legal Advice for Equity Release?

    The Equity Release Council reinstated in-person legal advice for equity release to ensure that borrowers get the same level of protection as they did pre-pandemic.

    The requirement of independent legal advice for borrowers was introduced when the first industry standards were launched in 1991.

    It became compulsory in 2013 that at least 1 consultation with a solicitor had to be face-to-face.3

    When Was In-Person Legal Advice Reinstated?

    In-person legal advice for equity release was reinstated in the UK in April 2022 following the easing of COVID-19 restrictions.4

    This allowed face-to-face meetings between equity release advisors and clients to occur, providing a more personalized and comprehensive service. 

    It is crucial for those considering equity release to seek expert legal advice to ensure they fully understand the terms and conditions of their agreements. Doing so in person makes it easier to discuss the finer details openly.

    Common Questions

    What Is the Importance of In-Person Legal Advice for Equity Release Returns?

    How Does Compulsory In-Person Legal Advice Affect Equity Release Returns?

    Why Is In-Person Legal Advice Compulsory for Equity Release Returns?

    What Impact Does Legal Advice Have on Equity Release Returns?

    Can Equity Release Returns Be Obtained without In-Person Legal Advice?

    Is Legal Advice an Equity Release Regulation?

    Does Telephonic Legal Advice Hinder the Equity Release Process?

    How Did the Pandemic Impact Legal Advice and the Equity Release Market?

    How Do I Find an Equity Release Solicitor?

    What Are Other Important Considerations About Legal Advice and Equity Release?

    Can I Choose My Own Equity Release Legal Advisor?

    What Questions Should I Ask My Equity Release Legal Advisor?

    In Conclusion

    With so may equity release opinions out there, it is essential that you seek independent legal advice from a qualified professional before making any decisions if you are considering equity release.

    It allows for a more personalised and comprehensive service, ensuring you fully understand the terms and conditions of the agreements. 

    The disruption of the Covid-19 pandemic forced the market into innovative ways of working, but as compulsory in-person legal advice returns for equity release, it is back to business as usual.

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