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ERC updates checklist for advisers

Jessica Bird

July 1, 2020

erc guidance

The Equity Release Council (ERC) has updated its adviser checklist, highlighting some of the most important factors to consider during the advice process to ensure its rigorous standards are met.

The updated checklist was issued to adviser members following a review by the council’s standards board, 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 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.

This version 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.

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

Chris Pond, chairman of the standards board at the ERC, said: “This updated checklist captures the most important points to cover from [Financial Conduct Authority (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”

Sara McLeish, CEO of Legal & General Financial Advice, said: “It’s great to see the ERC continue to lead on standards and drive improvements across the market.

“Equity release is not an ‘immediate needs’ product and the advice process needs to reflect this.

“We welcome the checklist for advisers but also the wider points raised, such as eligibility for state benefits or grants; these are going to be key in the coming months when many people will have to reconsider their financial plans due to the fallout from the COVID-19 crisis.

“This makes it ever more important for advisers to give really rigorous advice that considers the unique circumstances of each customer.”


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