Equity Release Council expands adviser checklist

A new checklist for advisers has been issued to adviser members following a review by the Council’s Standards Board.

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 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.

A recent FCA review found that the advice given to take out equity release products could not always be shown to be in the best interests of all consumers given their personal circumstances.

It found that advice given by firms did not always sufficiently take into account consumers’ personal circumstances and that consumers' reasons for looking at equity release were not always challenged by firms.

Additionally, the regulator found that firms weren’t always able to evidence that their advice was suitable.

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.”

Sara McLeish, CEO of Legal & General Financial Advice, commented: “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.”