Guide to Safer Equity Release – New Legal Framework Unveiled

The Equity Release Council has launched a comprehensive legal guide, accompanied by a report on consumer vulnerabilities. These initiatives are designed to enhance the legal support provided to customers, particularly the elderly, who may face increased risks of vulnerability.

The newly released “Vulnerability Vigilance” report highlights the most common vulnerabilities observed in equity release customers. The study analysed over 300 cases from the previous year where customers were flagged as potentially vulnerable. The findings revealed that health issues were the most prevalent, affecting 44% of the cases, followed by cognitive or capacity issues at 23%. Notably, in 24% of these cases, more than one vulnerability was identified.

David Burrowes, Chair of the Equity Release Council, emphasised the crucial role of independent legal advice in the equity release process. He stated, “Independent legal advice is essential for ensuring that equity release is used appropriately and can be a lifeline, improving pensioners’ living standards and positively impacting their families.”

Enhancing Legal Understanding and Support

The launch of the “Legal Guide to Equity Release” marks a step forward in educating and equipping legal professionals with the necessary tools to support clients effectively. Claire Barker, CEO of Equilaw, highlighted the complexity of equity release transactions and the need for lawyers to thoroughly advocate for their clients, ensuring they comprehend the implications of their decisions.

The guide aims to serve as an ongoing resource, particularly beneficial for those new to the market or unfamiliar with the specific requirements of later-life lending products.

Statistics and Success Stories

Since the mandate for independent legal advice in 1991, around 670,000 customers have accessed £48 billion of property wealth through equity release schemes facilitated by Council members. The data underscores the significant role such financial products have played in supporting elderly homeowners.

Legal Advocacy and Industry Commitment

Over three-quarters of cases where clients were identified as potentially vulnerable proceeded with additional support, showing the effectiveness of tailored assistance. For those cases where proceeding wasn’t possible or appropriate, issues such as diminished capacity and health concerns were the most cited reasons.

Carol Nuttal, Managing Director at Adlington Law, remarked on the pivotal role of legal advocacy in the equity release process. She stressed the importance of recognising the unique service provided by legal professionals in this sector, which often goes unacknowledged.

Looking Ahead

The Equity Release Council’s initiatives, including the legal guide and the vulnerability report, are designed to foster a better understanding among legal firms and encourage more robust support for customers considering equity release. By enhancing legal safeguards and advocating for vulnerable customers, the Council aims to ensure that equity release remains a safe and beneficial financial option for the elderly.