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

Recent regulatory changes mandate in-person legal advice for equity release to ensure consumers fully understand the terms and implications, enhancing protection and informed decision-making for homeowners considering these products.
  • Last Updated: 14 May 2024
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Francis Hui
The ERC Has Reinstated Face-To-Face Legal Advice for UK Homeowners Seeking Equity Release. Learn Why This Is So Important…
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Key Takeaways…

  • The Equity Release Council reinstates mandatory face-to-face legal consultations to ensure borrowers fully understand equity release implications, clarifying the complex details of equity release and providing clearer, more personalised advice.
  • Professional guidance is essential to avoid common pitfalls like unexpectedly high interest rates or concealed fees in equity release agreements.
  • This move aims to prevent misunderstandings and ensure that borrowers are well-informed about their financial decisions regarding equity release.

Compulsory in-person legal advice returns for equity release in the UK in response to concerns that telephone 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 it’s mandatory requirement of at least one 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.

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    Return of In-Person Legal Consultations

    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 an equity release loan can be received either as a lump sum or in smaller, ongoing amounts.

    However, it is 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 is 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 legal jargon and terms involved, discuss the potential risks and benefits, and clarify how equity release may 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 it’s 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 one consultation with a solicitor must 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 personalised 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 Telephone or Online 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 many 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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