17 June 2020
Council responds to FCA publication: The equity release sales and advice process, key findings
Statement from, Jim Boyd Chief Executive Officer, Equity Release Council:
“The financial regulator, the Financial Conduct Authority (FCA), has today published a report which raises concerns about advice and sales of equity release.
“It found that equity release is ‘working well for many consumers’ by helping to meet important social needs, from boosting retirement income to funding home improvements, repairs and adaptations. This is encouraging.
“The report also found that firms must do more to ensure they are giving appropriate equity release advice. We take the FCA findings extremely seriously and are disappointed that some advisers have fallen short of the highest possible standards.
“The Equity Release Council seeks to lead a consumer-focused market by setting the standards and safeguards that we require our members to adhere to. We are committed to working with our members and wider market to ensure all consumers benefit from good outcomes.
“To give some wider context to the FCA’s report, equity release makes up fewer than 2% of complaints about home finance products¹ and, of 38 complaints made to the Financial Ombudsman Service in the last year², only two were upheld.
“The combination of FCA regulation and Equity Release Council standards provides three levels of protection for customers, including:
- independent legal advice
- regulated financial advice, and
- clear product safeguards such as the no negative equity guarantee and secure tenure for life.
“The requirement for customers to receive independent legal advice is unique among mortgages and helps to ensure customers understand the product and are under no duress or coercion to enter into the contract.
“It is vital that customers are supported to consider both long and short-term needs when deciding whether equity release is right for them, as well as potential alternatives now and in future.
“The FCA’s findings will inform our ongoing work to support advice standards across the market.”
¹ FCA complaints data, H2 2016 to H2 2019
² ERC analysis of FOS complaints during the year to March 2020