The Role of the Equity Release Council
What is the Equity Release Council? What do they do and why does it matter?
If you own your home and are aged 55 or over, equity release schemes allow you to access some of the money tied up in its value.
This can be helpful for many homeowners but it’s important to understand how you are protected.
The Equity Release Council (ERC) is a group that sets rules to keep you safe. Choosing a company that is a member of the ERC gives you extra security and confidence in your decision.
Let’s learn more about what the Equity Release Council does and why it’s important.
Please Note: The content on this page is designed to be a helpful starting point for understanding equity release. It explores the concept, different plan types, and the general process involved. However, equity release is a complex financial decision with significant implications for your long-term financial security. To determine if equity release is the right option for you, it’s essential to consult with a qualified financial adviser who specialises in equity release products.
Who is the Equity Release Council (ERC)?
The Equity Release Council (ERC) is the industry body for the UK equity release sector; representing the providers, qualified financial advisers, solicitors, intermediaries.
It was originally established in 1991 as Safe Home Income Plans (SHIP), an industry body aimed at setting high standards and protections for consumers like you.
SHIP introduced core guarantees like the “no-negative equity guarantee” (ensuring you would never owe more than the value of your home), the “right to remain” (allowing you to stay in your home for life or until needing long-term care), and mandatory independent legal advice.
In 2012, SHIP expanded and became the Equity Release Council (ERC).
The ERC continues to uphold those original consumer protection standards while broadening its oversight of the whole equity release industry.
Importantly, not every equity release company has to join the ERC.
However, choosing a company that is a member means they’ve agreed to follow higher standards, giving you much better protection.
It’s important to look for providers who are members of the Equity Release Council (ERC). This ensures that your chosen plan adheres to the highest consumer protection standards.
Visit the Equity Release Council website: www.equityreleasecouncil.com
Product standards
The Equity Release Council (ERC) sets specific standards to ensure that the equity release products offered by their members are fair and protect your interests.
Here’s what those standards mean for you:
Interest Rates
For lifetime mortgages the rate must be fixed for each release or, if variable, the rate must be capped for the life of the loan.
Your Right to Stay
You must have the right to remain in your property for life or until you need to move into long-term care, provided the property remains your main residence and you abide by the terms and conditions of your contract.
Moving Flexibility
You have the right to move to another property subject to the new property being acceptable to your product provider as continuing security for your equity release loan.
No-Negative Equity Guarantee
The product must have a “no negative equity guarantee”. This means that when your property is sold, and agents’ and solicitors’ fees have been paid, even if the amount left is not enough to repay the outstanding loan, you won’t be liable to pay any more.
Optional Repayments
All customers taking out new plans which meet the Equity Release Council standards must have the right to make penalty free payments, subject to lending criteria.
Important Note
If you’re considering a plan that doesn’t meet all of these standards, the lender MUST be clear about which standards it doesn’t meet and explain the potential risks this poses for you.
Why Choose an Equity Release Council Member?
Selecting a provider who is a member of the Equity Release Council (ERC) offers significant benefits and peace of mind.
ERC members must uphold a strict code of conduct, prioritising fairness and consumer protection. This ensures you are treated respectfully and transparently throughout the process.
The ERC also has a robust complaints procedure in place, so if you have concerns about an ERC member, your issue will be taken seriously and investigated thoroughly.
Equity release advisers who work with ERC members must possess specialised qualifications and are held to higher standards of practice so you’ll receive expert guidance tailored to your situation.
More importantly, they are obligated to act in your best interests, providing a full assessment of your options, including whether equity release is truly the right choice for you.
ERC members must use plain language to explain all costs, fees, benefits, and potential risks of equity release.
You won’t be subjected to confusing jargon or hidden clauses.
Additionally, ERC providers are prohibited from high-pressure sales tactics, allowing you the space to make an informed decision that aligns with your financial goals and priorities.
Choosing an ERC member empowers you as a consumer and delivers the assurance that you are dealing with an ethical and reputable provider committed to your well-being.
Equity Release Advice
Award winning service
Equity release experts
FCA Regulated
Let us match you with a fully qualified equity release expert.
Call us on 0330 030 5050
Overarching Principles
Members will comply with all statutory regulation. In addition, members will agree to comply with the Council’s principles, required consumer outcomes and rules.
The overarching principles are:
- Members will ensure that all their actions promote public confidence in equity release.
- Members will act at all times to deliver good outcomes for retail customers.
- Members will ensure conflicts of interest are identified swiftly and managed fairly.
- Members will seek to deliver suitable outcomes for customers from initial sale through every point of contact during the life of the product.
Required Customer Outcomes
Members will provide information, advice, and professional services that are clear, transparent and impartial.
The five required customer outcomes are as follows:
- Members will offer customers the products and services that suit their needs best and which offer fair value.
- The amount charged by a member for a product/service should reflect the benefits customers expect and communicated in a manner customers can understand.
- Members will seek to identify and provide appropriate support to customers who may be exposed to physical, mental and financial vulnerability at any point of contact.
- Members will do their best to make sure that customers understand their rights and responsibilities at every point of contact.
- Customers will be confident that they will be able to live in their own property for as long as they wish, or move to a suitable alternative property, as long as they abide by the terms and conditions of their contract.
Additional Benefits
Choosing an ERC member isn’t just about the immediate transaction – it’s about knowing you have ongoing support and protection throughout your equity release journey.
Here are some key ways the ERC goes beyond the basics:
Complaints Procedure
If you ever have a dispute with an ERC member, the ERC has a well-defined complaints process.
This includes investigation and potential mediation to help reach a fair resolution.
Product Standards
ERC product standards aren’t just a one-time check. They are continuously reviewed to ensure they provide clarity and protection within a changing market.
This means the plans you choose are designed to be as fair and safe as possible.
Consumer Education
The ERC actively works to educate consumers about equity release.
They provide resources and information, empowering you to make informed decisions about your financial future.
Industry Advocacy
The ERC works directly with regulators and policymakers, advocating for high standards across the entire equity release industry.
This promotes a positive overall environment for consumers like you.
Peace of mind
When exploring the world of equity release, choosing an Equity Release Council (ERC) member offers you the highest level of security, protection, and peace of mind.
By adhering to strict standards, including the “no-negative equity guarantee” and independent legal advice, ERC members ensure your interests are always prioritised.
You will be provided with a fair, simple and complete presentation and explanation of your equity release plan. The benefits and limitations of the plan will be clearly set out, together with your obligations under the terms of the contract.
You will be given information about:
- all the costs that you will have to bear in setting up the plan
- the tax implications
- what will happen if you wish to move to another property
- how changes in house values may affect your plan
Let Respect Mortgages help you take the next step.
We can match you to an award winning equity release specialist, with over 25 years experience helping people just like you. Importantly they’re also members of the Equity Release Council.
Please call us on 0330 030 5050 for more details.
We can help you find a whole-of-market equity release specialist.
FREE matching service
Call us on
0330 030 5050
Membership demonstrates a commitment to responsible practices and attracts a wider pool of potential customers who value the ERC’s safeguards.
The main risk is that the debt grows over time due to interest. You may also have less equity to leave as inheritance.
Lifetime mortgages and home reversion plans are the two main types.
Lifetime mortgages allow you to take out cash in lump sums or smaller withdrawals, while home reversion plans involve selling your home to a provider, with the right to live there for life.
Equity release can provide financial flexibility to improve your lifestyle, pay off debts, or support family.
You can search the ERC website directory to find qualified equity release providers in your area.
Yes, everyone needs to get expert financial advice before taking out an equity release plan.
A financial adviser will assess your financial situation, explore alternative options, and explain the pros and cons of equity release.
If required they will search for the best equity release plan for your situation.
No, you won’t lose your home under an Equity Release Council (ERC) approved plan.
You retain the right to live there for life or until you enter long-term care. The loan only becomes repayable when you pass away or permanently move out.
Your existing mortgage must be repaid in full as part of the equity release process. The funds from your equity release will be used for this purpose.
The “no-negative equity guarantee” is a key consumer protection offered by ERC members.
It means that no matter what happens in the housing market, you’ll never owe more than your home’s value when it’s eventually sold to repay the loan.
This protects you and your loved ones from unexpected debt.
Learn more: https://www.equityreleasecouncil.com/what-is-equity-release/faqs/any-risks/
Yes, independent legal advice is a requirement for anyone considering an equity release plan under the Equity Release Council (ERC) standards.
This ensures you fully understand the legal terms, potential risks, and how the plan impacts your finances and long-term goals.
A solicitor specialising in equity release will carefully explain the agreement, ensuring the terms are fair and protect your best interests.
No, Respect Mortgages is not a member of the Equity Release Council, nor are we able to give you financial advice.
Our author, Sean Horton, does have the CII level 3 Certificate in Equity Release qualification, voluntarily choosing to take the exam when they first came out (a long time ago!!).
A good place to start is our Equity Release Hub, this gathers together all of the equity release guides and articles.
Or dive straight into our Equity Release Guide.
