Equity Release Council updates its Checklist for Advisers

The Equity Release Council has updated a key safeguard that highlights some of the most important factors to consider during the advice process and ensures its rigorous standards are met.

A new Checklist for Advisers was issued to adviser-members following a review by the Council’s Standards Board which was informed by conversations with major stakeholders over several months.

Adviser members are required to complete the Checklist, which has been expanded from 12 to 24 points, including an extra focus on vulnerable and remortgaging customers as well as those consolidating debt.

The comprehensive checklist is designed to complement customer-facing documents, including fact finds and suitability reports, and support a consistent standard of advice for consumers across the market.

Chris Pond, Chairman of the Council’s Standards Board, said:

“This updated Checklist captures the most important points to cover from FCA regulations and Equity Release Council Standards.
“We are continually reviewing our standards, and this latest version of the Checklist will support advisers in taking a personalised approach to each customer.

“The update will help address subsequent feedback highlighted in the regulator’s recent review of the sales and advice process by helping advisers to understand, fulfil and demonstrate the specific needs of each and every customer.

“Coupled with independent legal advice and product safeguards, this financial advice process provides the highest level of consumer protection for any later life property-based loan.

“We encourage customers who are considering releasing equity to use a Council member, to benefit from these extra protections and safeguards. We also call on more advice firms to sign up to these best practice standards”

The new Checklist builds on an update of the Council’s rules and guidance, which came into
effect on 1 January 2020. It prompts advisers to recommend that customers review or set up a will and seek advice from a solicitor or qualified person if they do not have a Power of Attorney.

It also underlines the importance of establishing if a customer has experienced difficulties with their physical or mental health, bereavement, divorce, emotional or financial issues, literacy, numeracy, or any other traumatic event, that may leave them in a vulnerable position.

Where a customer is re-mortgaging onto a lower interest rate or to release further capital, the checklist captures the need for a detailed analysis of features and benefits to compare the existing and recommended new plan.

These points, which are all established within the equity release advice process, sit alongside wider considerations, such as:

• establishing the customer’s eligibility for state benefits

• ensuring the amount released does not exceed the customer’s requirements

• ensuring the customer has put together a realistic expenditure budget plan

• fully discussing alternatives to equity release including trading down, grants, use of savings or pension income, and financial assistance from family members (both now and if these alternatives may be relevant in the future).

Members of the Council include providers, legal practitioners, surveyors, funders and a growing variety of advice firms – all of whom sign up to the Council’s best practice Standards of consumer protection.

A webinar on the new Checklist for Advisers took place on June 18 and is now available to members as a podcast by clicking here. Click here to download the Checklist itself.