What is Equity Release > How Is Equity Release Regulated?

How is equity release regulated?

If you are considering equity release, it’s reassuring to know that a number of standards and regulations are there to protect you.

How you are protected when taking out equity release

You have the reassurance of considerable consumer protection when taking out an equity release plan. From your initial conversations with an adviser through every step of the process, regulation is there to provide safeguards.

This is welcome news because choosing equity release is an important decision. It needs to be taken only when you are fully aware of the pros and cons of equity release. Due to the consumer protection in place, you can be confident of being able to make a fully informed decision.

We hope this guide to equity release regulation and standards will be of interest and help if you are considering equity release as a way to raise retirement income or extra finance before retirement. We can also arrange professional regulated advice: call us on 0808 178 3055 or request a call back and we can book a no-obligation appointment with one of our selected FCA-regulated equity release advisers.

FCA equity release regulation

Anyone offering you advice on equity release, or providing you with an equity release product, must be regulated by the Financial Conduct Authority, usually known as the FCA. Equity release is one of many financial markets supervised by them, as they are the UK’s financial services regulator and watchdog.

This means that equity release brokers, advisers and lenders are required to follow strict rules and codes of conduct when providing you with information, advice or equity release products.

For example, the FCA Handbook lists extensive standards for advisers and equity release providers. The focus of these FCA equity standards is on ensuring that consumers take out an equity release plan that is suitable for their needs and circumstances. Some specific requirements include considering:

  • Whether the benefits to the customer outweigh any adverse effect on their tax position or their entitlement to means tested benefits
  • Whether alternative methods of raising the required funds would be more suitable
  • The customer’s preferences for their estate, including whether leaving an inheritance is important to them 
  • The customer’s future plans and needs, such as whether they are likely to move house in the future 

When the team here at Equity Release Wise arranges appointments for our customers, we only do so with selected FCA-regulated equity release advisers who are required to comply with FCA equity release standards. To talk to one of these regulated advisers, please call 0808 178 3055 or request a call back.

Check your eligibility

Call us on 0808 178 3055 and we’ll arrange a free, no-obligation appointment and lifetime mortgage advice* from a specialist who will confirm whether you are eligible. If you’re unable to talk now, request a call back and we’ll call when it’s convenient for you.

Check my eligibility

The Equity Release Council

For more than 30 years, the Equity Release Council has been the UK’s industry body setting standards to protect consumers. It is strongly recommended you only deal with advisers who are Equity Release Council members, such as our selected advisers, as they commit to following the organisation’s code of conduct and standards.

By signing up to the Equity Release Council rules and standards, advisers and providers commit to giving you ‘fair, simple and complete’ information about your equity release plan. This should include all the costs involved, tax implications, what will happen if you move to another property, and how changes in property values may affect your plan.

Other standards followed by Equity Release Council members include:

  • Your right to live in your property for life or until moving into permanent residential long-term care
  • You can move your plan to another property as long as it meets the lender’s criteria
  • The ‘no negative equity’ guarantee
  • The right to make voluntary, penalty-free partial loan repayments
  • For a lifetime mortgage, interest rates must be fixed or if they are variable they should be capped at an upper limit
  • You can choose your own solicitor and not be tied to one recommended by an adviser

Furthermore, Equity Release Council members are required to follow certain principles and outcomes. For example, advisers should offer their customers products and services that best suit their needs and that are fairly priced. Advisers should also seek to identify and provide appropriate support to customers who may be exposed to physical, mental and financial vulnerability.

What if I have a complaint about the service I receive?

The Financial Conduct Authority insists that the businesses it regulates have procedures in place for resolving disputes with their customers. They also say that complaints have to be acknowledged promptly and resolved as soon as possible and within eight weeks at the latest.

The FCA provides useful ‘How to complain’ information. If you follow this guidance and complain to a firm and are not happy with their response, you can contact the Financial Ombudsman Service to take things further.

Further protection from the Financial Services Compensation Scheme

You have additional protection should things go wrong, thanks to the Financial Services Compensation Scheme (FSCS).

This means you could claim compensation if you lost money because, for example, you were advised to take out a lifetime mortgage that was unsuitable for you at the time and the broker or adviser you dealt with has failed. The FSCS also offers protection specific to equity release customers who lose money due to:

  • Advice to take out a lifetime mortgage that was unsuitable (for advice given after 31 October 2004) 
  • Bad advice about home reversion plans (since 6 April 2007)

Did you know?

Government statistics reported that average weekly income for UK pensioners rose from £168 in 1995 to £331 in 2020. However, pensioners aged 75 and over had only seen their average income rise to £302 per week.

How can we help?

To find out more about equity release or arrange a consultation with an adviser, please call or request a call back and we’ll be happy to help further.

Let’s talk

Let us help with your questions or arrange a quote.

Call 0808 178 3055

Request a call back

Book a call at a time that suits you and we’ll call you back.

Request a call back

Are you eligible?

Find out how much tax-free cash you could release.

Check now

Apply for your no-obligation equity release quote

Find out if you qualify for equity release and how much you could borrow. Just click ‘Get started’ or call us on 0808 178 3055 and one of our team will be delighted to help arrange a free consultation and quote*.

Start your quote journey icon

1. Start your quote journey

Simply click ‘Get started’ to begin your search for the best plan for your circumstances.

Tell us what you need icon

2. Tell us what you need

Fill out some simple details about your situation so we can start to prepare your quote.

Compare your best deals icon

3. Compare your best deals

You’ll get personalised quotes tailored to your unique circumstances and goals.

Answering your questions

Still unsure of a few things? We’ve got you covered with answers to some of our most frequently asked questions.

  • How is equity release regulated by the FCA?

      Any firm selling or advising on equity release must be regulated by the Financial Conduct Authority (FCA). Equity release is a potentially complex matter, so it is reassuring to know that this level of protection for consumers is in place. The FCA regulates equity release in a number of ways, including putting in place rules and standards to ensure that consumers take out plans that are suitable for their needs and circumstances.

  • Is there an Equity Release Council ‘code of conduct’?

      The Equity Release Council doesn’t have a ‘code of conduct’ as such, but it does issue extensive rules and standards for members to follow. These include ensuring that you are provided with comprehensive information about your equity release plan including the costs involved, any impact on your tax situation and so on. Equity release products offered by Council members will also include standards such as your right to remain in your property, the ‘no negative equity’ guarantee and the right to make voluntary loan repayments with a lifetime mortgage.

Your equity release options

See the links below for guides to the different types of lifetime mortgage, or call 0808 178 3055 or request a call back to arrange a consultation with our selected equity release advisers.

Product lump sum icon

Lump sum lifetime mortgage

Access a tax-free cash lump sum if you’re a homeowner aged 55 or over. You retain full ownership and can stay at home until you pass away or move into long-term care.

Read more about lump sum lifetime mortgage plans
Product drawdown icon

Drawdown lifetime mortgage

Instead of making a one-off cash withdrawal, you take an initial cash sum and additional funds as and when you need them. This helps to reduce the total interest you pay.

Learn more about drawdown lifetime mortgage plans
Product interest only icon

Interest-only lifetime mortgage

A more cost-effective method of equity release where you make voluntary interest payments to reduce or prevent compound interest building up.

Discover more about interest-only lifetime mortgage plans
Product enhanced icon

Enhanced lifetime mortgage

Certain health conditions or lifestyle factors could qualify you for higher cash releases or lower interest rates. A simple questionnaire is all that’s needed to check eligibility.

Read more about enhanced lifetime mortgage plans
Product second home icon

Second home lifetime mortgage

If you have a second home you may be able to secure a lifetime mortgage against it, or make your dream of a second home come true with a release from your main residence.

Read more about second home lifetime mortgage plans
Product buy to let icon

Buy-to-let lifetime mortgage

These specialist plans could enable you to release equity from a buy-to-let property, or to use the wealth in your home to help you make a buy-to-let investment.

Read more about buy to let lifetime mortgage plans

Another, much less common form of equity release may be a more suitable alternative to a lifetime mortgage. A home reversion plan is a type of equity release where you sell all or part of your property at less than market value in return for a lump sum, a regular income, or both. You stay in your home as a tenant, paying no rent, until you pass away or move into long-term care.