Very low number of equity release complaints in Q1 2024

Low level of complaints highlights success and importance of equity release safeguards

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New data reveals the number of complaints from equity release customers remains remarkably low, highlighting the success and importance of the industry’s strict safeguards.

The data for the first quarter of 2024 shows that just 34 complaints were made to the Financial Ombudsman Service (FOS) about equity release products – and only nine of these complaints were upheld.

A growing market with few complaints

According to data, as reported by the Equity Release Council, complaints about equity release products made to the FOS have remained low, even as the market has grown. 

Kelly Melville-Kelly, Risk, Policy, and Compliance Director at the Equity Release Council, wrote about the findings in a recent article for Mortgage Solutions. 

According to the data, in the first quarter of 2024 there were 82 complaints mentioning ‘equity release’. However, the FOS found that only 34 were specifically about equity release products. The rest were related to broader financial issues such as investments, banking scams, building insurance and residential mortgages. 

The data shows that 11 of the 34 complaints were made by executors or family members. This may suggest that family members aren’t always involved in the decision-making process when someone takes out equity release. This is something that the Equity Release Council actively encourages, since family members can be impacted by a decision to release equity.

The impact of effective safeguards

The effectiveness of the Equity Release’s Council’s  five equity release guarantees is evident from the low number of complaints seen in the FOS data. Of the 34 complaints specifically about equity release products in early 2024, less than a third (nine) were upheld or partially upheld. This low figure highlights the value of the ERC’s safeguards and the high quality of advice in this market.

Further analysis shows that the main reason behind upheld complaints was delays in the process, leading to the customers experiencing higher interest rates. With the Bank of England raising rates multiple times in recent years, customers were eager to complete transactions quickly.

Melville-Kelly commented: “In 2022, we saw eight interest rate rises and, in 2023, the Bank of England increased rates five times, which saw people clamouring to complete as quickly as possible. While equity release rates are linked to gilts, the sense of urgency as products rates change quickly was also evident in this part of the later life lending market.”

The FOS data shows that the comprehensive regulatory framework and high standards enforced by the Equity Release Council have effectively minimised customer dissatisfaction.  

As the market evolves, maintaining and enhancing these protections will be crucial in ensuring equity release remains a safe and beneficial option for homeowners.

What are the equity release guarantees?

The Equity Release Council sets high standards to ensure that equity release products are safe, reliable and transparent. All members of the Council must abide by a strict set of standards, which include:

• No negative equity guarantee. This ensures that borrowers will never owe more than the value of their home, protecting them and their estates from owing more than the property is worth.
• The right to stay in your home. Customers have the right to live in their home for life or until the last owner moves into long-term care, providing stability and peace of mind.
• The right to sell your home. You have the right to move to another property, subject to the new property being acceptable to your product provider.
• The right to make penalty-free payments. You have the right to make voluntary payments towards your plan without incurring penalties, up to a certain amount each year depending on your provider’s criteria.
• Fixed or capped interest rates. All equity release products must have fixed interest rates or, if variable, they must have a capped limit, protecting borrowers from unexpected rate increases.

Do you want to discuss the option of equity release?

If you are thinking about tapping into your property wealth with equity release, then do get in touch. Call us on 0808 178 3055 or request a call back and we’ll arrange a no-obligation appointment with one of our selected advisers.

They can confirm your eligibility for equity release and look for the best equity release rates from leading providers. They’ll also be able to explain all the pros and cons of a plan, including how equity release will reduce the value of your estate.

Remember, if they do not think equity release is the best financial option for you right now, our selected advisers will tell you. It is a completely pressure-free opportunity to learn more about how a plan might work for you.

You can also get a quick estimate of how much money you could unlock from your home with our free equity release calculator.

About Clare Yates. With over a decade’s experience writing about later life financial planning, Clare offers a wealth of knowledge about equity release, pension annuities, wills, LPAs and more. When she isn’t writing, Clare likes to spend her time baking and going on walks with her husband, two children and their rescue dog. Follow Clare on LinkedIn