Equity Release Council publishes temporary update to legal advice rules during COVID-19 lockdown

The Equity Release Council (the Council) has published a temporary modification to the requirement for equity release customers to receive legal advice in a face-to-face setting during the COVID-19 pandemic. 


The revision follows a detailed consultation with members and industry on the most effective way to maintain product safeguards, while also protecting customers’ personal health and wellbeing in the current climate.


It involves a new process designed with input from across the sector including providers, funders, advisers and in particular expert legal advisers with experience of equity release transactions across the UK. The Council’s Standards Board, with independent consumer and regulatory experts, also supported this process. 


This will enable legal advice to be provided remotely without a physical face-to-face meeting during this unprecedented period of national lockdown and social distancing.


The agreed approach ensures multiple, mandatory contact points between the solicitor and customer before committing to take out an equity release plan. It involves a combination of written advice and documented video or telephone calls, which increase the total number of interactions between customers and legal advisers as a result.


As a temporary measure, it will enable independent legal advisers to continue fulfilling their key duties to consumers who are considering the option of equity release, by ensuring that: 


  1. The client’s identity has been fully established;
  2. The client has mental capacity to enter into an equity release contract;
  3. The client is not under duress or coercion to enter into the equity release contract;
  4. Where there is more than one party, both agree to enter into the equity release contract.


The revision can only be used while the Government has directed the public to stay at home to contain the spread of COVID-19. During this period, the mandatory physical witnessing of a client’s signature on the mortgage deed can be carried out by an independent adult witness of the client’s choosing, who will also be subject to identity checks and due diligence.


Once restrictions on movement have been lifted, the aim is to return to the full face-to-face legal process with immediate effect. Any cases where sufficient checks cannot be carried out should be delayed until Government restrictions have lifted.


David Burrowes, Chairman of the Equity Release Council, comments: 

“These are unprecedented times and the Council is pleased to have secured industry support for a solution that ensures consumers can continue to access quality, independent legal advice when considering whether to release equity from their homes. 


“The new measures have been designed with input from expert solicitors who provide legal advice on equity release transaction across the UK. It is designed to support large and small solicitors to advise safely on equity release at this time.


“This unique and temporary solution is the result of collaboration and sharing of legal expertise among Council members in challenging circumstances, to ensure consumers’ interests remain protected. The Council will keep this modification under close review until it ceases, when the Government ends its ‘stay at home’ requirement. 


“The process has also reaffirmed the value of the ‘gold standard’ face-to-face requirement for independent legal advice which is retained to use if and when Government guidelines allow. 


“Property wealth plays an increasingly important role in later life planning, and these measures to maintain access to equity release legal advice for older consumers will continue to ensure it is chosen for the right reasons, as part of a carefully considered process that looks at both short- and long-term needs.”