Is Equity Release Regulated?
Equity release in it’s earliest formats was not always held in high esteem. In fact that has been much bad press regards older equity release schemes in the 1990’s called Shared Appreciation Mortgages (SAM’s) & misguided advice in the past. Therefore, some form of checks & standards needed to be introduced given the nature of the age group taking out these plans & possible frailties involved.
Therefore, government intervention took place & resulted in lifetime mortgages being regulated by the Financial Conduct Authority (previously the FSA) with effect from October 2004 and home reversion plans soon following in April 2007. This laid down the foundations on how equity release schemes would be sold & recompense for homeowners that had been given poor advice by introducing access to the Financial Ombudsman.
Furthermore, the industry also has a trade body which lays down further principles which all equity release advisers should abide by. The Equity Release Council was initially formed in 1991 and was then known as SHIP – Safe Home Income Plans. A code of conduct was established where certain principles of ethics and plan inclusions needed to be adhered to. These would include a no negative equity guarantee, the ability to move home in the future, the option to repay the plan at any time (subject to potential penalty) & the right to remain in the property for life.