Adviser members will now present every customer with a suitability report to show the reasons why a particular product has been recommended for their personal needs.
Nigel Waterson, chairman of the Equity Release Council, said: “The modern Code of Conduct gives equity release customers unparalleled protection, and these latest additions to The Council’s rules and guidance will bring them even greater comfort as they explore their financial options in later life.
“A combination of outside regulation and self-governance helps to ensure customers are fully informed of their options and in the best possible position to judge how to make their finances work in retirement. With incomes squeezed and non-existent returns from many savings accounts, this often means bringing their property wealth into play – the largest asset which many over-55s have at their disposal.
“Equity release product rates have recently improved in line with market conditions, and while they remain differently priced than residential mortgages, this reflects the greater commitments from lenders to protect their borrowers against the threat of negative equity.”
Provider members must also make a copy of The Council’s Code of Conduct available – either directly or via The Council website – to anyone looking to agree an equity release loan. This has been designed to ensure every customer understands the level of service and support they are entitled to receive.
The Code itself was founded in 1991 and ensures members act in the best interests of consumers.
It gives them the right to use their property as their main residence for life; ensures they receive a fair, simple and complete presentation of their equity release plan and the costs involved; confirms their right to independent legal advice; and guarantees they will never owe more than the value of their home.
The Council now specifies that independent legal advice must be given face-to-face by a qualified professional as an added safeguard so that consumers fully understand any loan they take out.
These changes form part of The Council’s updated Rules and Guidance which apply to its wider membership of providers, advisers, intermediaries, lawyers and related equity release professionals.
Membership has flourished to almost 300 since The Council’s relaunch in May 2012, while the wider industry has leapt in value by 13% year-on-year*.
With members continuing to report increasing demand over the summer, this growth rate puts the industry on course to exceed an annual value of £1bn in 2013 for the first time in five years.