Equity Release plans are income plans for the elderly. The two most common types of plan in the UK are lifetime mortgages and home reversion plans. In the 1980s some equity release plans involving investment of money from the plan holder’s home into other bonds and schemes led to many pensioners becoming seriously out of pocket, or worse still, owing their lender more than their home was worth. Therefore, the market had to be regulated to prevent this kind of thing happening again.

The Safe Home Income Plans (SHIP) company was brought in to regulate equity release providers. SHIP has now been swallowed up into a larger corporation named the Equity Release Council (ERC). The Equity Release Council still performs the same regulatory role as SHIPs but now has expanded to represent all participants in the equity release market. The main functions of the ERC are to ensure that equity release plans are safe and that consumers understand the implications of the plan they are taking out.
The SHIP standards board is the part of the Equity Release Council which deals with setting out a code of conduct for equity release providers. This code ensures consumers are safe in their equity release plan. If you thinking of are taking out an equity release plan you must ensure that it complies with SHIP standards and that the provider is a member of the Equity Release Council. Equity Release Council members have to adhere to rules ensuring they are hitting the best standards within their sector and provide the customers with a full explanation of their plans. Equity Release Council Members must: –

1. Allow their client to stay in their home or move to another property if circumstance requires it.

2. Give their clients clear and full explanations of the plans they offer, including any implications, small print, benefits and costs of taking out the plan.

3. Ensure an independent solicitor is instructed by the client. This independent solicitor must verify the client completely understands the plan they are taking out. The equity release provider cannot provide the plan unless they have received this certification from the client’s solicitor.

4. Provide a no negative equity guarantee: this prevents the issue which arose in the 1980s when pensioners owed more than the worth of their house. No debt should remain when the client passes away.
If you have taken out an equity release plan with a member of the Equity Release Council you can be safe in the knowledge that you are protected. Complaints about equity release providers are now minimal due to the existence of the Equity Release Council.

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If you need a solicitor to advise you about your equity release options, contact us today. Call 0800 142 2901 or fill in an online enquiry for a free, no obligation initial consultation with one of our specialist team.

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