Who Is SHIP and What Role Does It Play in Equity Release?
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- SHIP, now known as the equity release Council (ERC), is a self-regulatory body for the equity release industry in the UK, ensuring ethical treatment of consumers.
- The Council offers protection for your plan by setting stringent standards of conduct and professionalism for its members.
- They include reputable companies such as Legal & General, Aviva, and Canada Life among others.
- ERC plays a pivotal role in the process as it maintains high ethical standards, promotes consumer safety, and protects their interests in equity release transactions.
- Not all plans are protected by the ERC, it only oversees plans offered by its members, hence it's crucial to check whether a provider is a member before proceeding.
Have you heard about SHIP equity release but are wondering what it is, is equity release a safe option, and if it's still relevant in 2024?
With £6.2m released in 2022,1 staying on top of the latest industry information is important.
Luckily, we have done the research for you.
In This Article, You Will Discover:
Equity release has changed significantly over the years thanks to SHIP.
What Is SHIP in Equity Release?
SHIP, or Safe Home Income Plans, is an industry body in the UK that represents the majority of equity release providers.
The primary role of SHIP is to implement safeguards and standards to protect consumers who utilise equity release plans.
SHIP values its commitment to responsible equity release, ensuring that all members provide transparent and fair services.
In 2012, SHIP rebranded as the Equity Release Council (ERC), broadening its original remit.
The ERC continues to promote safe equity release practices, providing a set of guarantees for homeowners including the right to remain in their property for life and the assurance of no negative equity.
The SHIP Equity Release Guarantee Explained
The SHIP equity release guarantee can be explained as a code of practice designed to ensure the safety of the equity release industry and its investors.
Established in 19911, the body is committed to promoting safe home income plans and ensuring the protection of plan holders.
Launched in response to the investment schemes on the market in the late 1980s, which left many older people struggling financially, SHIP was the first trade body to initiate the regulation of home reversion schemes.
SHIP (now known as the Equity Release Council) now represents over 90% of the equity release market2.
Equity release providers who follow the SHIP code of practice must abide by the following rules:
- Provide a simple, fair, and complete presentation of its schemes.
- All legal work must be performed by a solicitor of the client's choice.
- Clearly state all costs involved.
- Provide a "No Negative Equity" guarantee. Meaning the homeowner will never owe more than the value of their home.
SHIP members can also guarantee that homeowners have the right to live on their property for life and will receive cash in the form of a lump sum or regular income payments.
SHIP Sets Sail
The equity release market saw massive growth from 1965, when the first reversion scheme was launched (now known as Hodge Equity Release), to the late 1980s.
Unfortunately, things took a turn for the worse in the late 80s when new companies on the market launched home income plans which invested the cash take out.
These investments were negatively affected by the stock market crashing and interest rates increasing, which caused many people to lose their homes or land in a negative equity situation.
In 1991, home income plans were banned by regulators, leaving equity release with a bad name.
To save the industry, a new industry body, SHIP, was launched.
Leading equity release providers came together to formulate a resilient code of conduct for the sales and advice process and critical features for safe plans, such as a no-negative equity guarantee.
By 2006, there were already 21 providers following the SHIP code of conduct.
These providers were:
- Allchurches Life
- Hodge Equity Release
- Home & Capital Trust
- GE Life
- Norwich Union (now Aviva)
- Northern Rock
- Key Retirement Solutions
- Stroud & Swindon
- Mortgage Express
- National Counties Building Society
- New Life Mortgages
- Standard Life Lifetime Mortgages
- In Retirement Services (Reversions)
- Just Retirement Ltd
- West Mortgages
- Partnership Home Loans
- Retirement Plus
- Stonehaven Equity Release
In 2004, the government decided to regulate lifetime mortgages.
However, there were still no official regulations for home reversion schemes.
SHIP pushed for regulation of both schemes by establishing an influential complaints board and launching its own home reversions code to protect consumers.
The lobbying was a success, and as of April 2008, home reversion schemes were formally regulated.
Rise of Professionalism
In 2007 SHIP announced that it would only be accepting business from advisors with the correct equity release qualifications.
Determined not to compromise its stance on providing the highest quality consumer protection, it later (in 2008) decided that it would no longer accept business from advisers without a home reversion qualification.
SHIP Relaunches as the Equity Release Council
In 2012 SHIP relaunched as the Equity Release Council (ERC)3 and expanded its membership from equity release providers to advisors, lawyers, intermediaries, surveyors, and other interested parties.
All aspects of equity release advice are now covered by the council, which is committed to consumer education and protection.
The Equity Release Council's job is to do the following:
- Represent members across the equity release industry, from lenders to firms and individual financial advisers, solicitors, and surveyors.
- Promote a high standard of conduct and practice among equity release providers.
- To protect the interests of homeowners either considering or in the process of releasing equity.
- To ensure that the process of releasing equity is better understood.
The ERC hopes this rebrand will help promote the sector and educate consumers considering releasing equity from their property.
What Is SHIP in Equity Release
How Does SHIP Protect My Equity Release Plan
What Companies are Members of SHIP in Equity Release
Why is SHIP Important in the Equity Release Process
Are All Equity Release Plans Protected by SHIP
SHIP (now known as the ERC) is a trade body promoting safe home income plans and protecting equity release plan holders.
If your selected provider is a member of SHIP (or ERC), it'll have to abide by certain minimum standards in terms of the advice it gives you and its products' terms.
Now that you know what SHIP is, you can see why choosing an equity release provider with a SHIP (now ERC) membership, is not only a safe decision but the only decision.
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