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Is Equity Release Safe ?

Outlined below are 5 factors that help make Equity Release safe and give you peace of mind.

1. FCA Regulated

Equity Release is fully regulated by the Financial Conduct Authority  (FCA), an independent public body.  The FCA's role is clear. It is there  to protect the consumer, to protect and enhance the integrity of the U.K. financial system. 

As Equity Release is an advised product, you cannot take out a plan without first receiving financial advice from an authorised FCA independent financial adviser. This advice and expertise is there to ensure you are fully aware of all aspects of the product before proceeding.

The FCA is there to make sure Equity Release firms and Equity Release advisers conduct their businesses ethically and are fully transparent in all their dealings with the customer. 

Before proceeding, you can check if the adviser is on the Financial Conduct Authority register and check the Firm's FCA Number. In being on the FCA register, the firm must sign up to the Financial Ombudsman Service, which is a free-to-use complaints service if you’re unhappy with the service you receive. 

2. Equity Release Council

Since 1991, the Equity Release industry, including Equity Release providers, have been governed by a consumer centric trade body called the Equity Release Council (ERC). The Council has strict codes of conduct which providers must follow to protect the interest of consumers and ensure you are kept financially safe and secure

"Over the course of 25 years, the Equity Release Council continues to represent the equity release sector and exists to promote high standards of conduct and practice in the provision of and advice on equity release which have consumer safeguards at its heart."

"These standards and safeguards have allowed the sector to grow, giving financial advisers and their customers confidence in the products, dispelling myths about equity release, and educating the public about the potential to access the wealth in their home for a variety of uses."

https://www.equityreleasecouncil.com/about/#who-we-are

3. Equity Release Council Approved Plans Come With The Following Safeguards

• You will never owe more than the value of your home due to the Equity Release Council “No Negative Equity Guarantee” This means you cannot pass on any debt to your family or beneficiaries.
• You have the right to remain in your home as long as you choose.
• You will retain full ownership of your home and if you choose to move home in the future you can transfer your lifetime mortgage to your new property as long as the property meets the new lender’s criteria. You can check if an adviser or the provider is a registered member of the Equity Release Council to ensure that this applies.

4. Legal Advice

As part of the Equity Release process, it is compulsory to have at least one meeting with an independent solicitor. The solicitor will give you legal advice and make sure all the related contracts and paperwork are in order and that all actions carried out relating to your plan, your estate and what is left to your beneficiaries are exactly as you have agreed.

5. More Flexible Options To Choose From

In its early days, Equity Release was very inflexible, with a limited number of plans and it was much harder to have the control in the areas you wanted it. Now, with over 300 plans you have greater choice and peace of mind. For example, you can manage the interest of the loan by making voluntary payments during the term. You can also only draw the amounts of cash you need, when you need it, so you can again control the amount of interest paid.