This month, the Equity Release council made it mandatory for all UK citizens looking to release equity to have at least one face to face visit with a solicitor before committing to any plan.
This marks a return to pre-pandemic criteria following a temporary change in rules by the Equity Release Council back in April 2020. The changes were made so that customers could still access equity release products when lockdowns were the norm and face to face meeting were not possible due to social distancing rules.
New equity release customers have been required to take out independent legal advice since the first industry standards were formulated back in 1991, with legal requirement of a face to face meeting added later in 2013.
With many companies across all industries forced to rethink their working environment during the pandemic, the temporary change to the face to face requirement was made with the application process being a mix of telephone calls, documented video and written advice.
This resulted in there being an increase in the amount of interaction between the client and the solicitor so that extra checks establishing the customers identity and whether they are of sound mind and have the mental capacity to enter into a legal contract, as well as the agreement to proceed by all parties with no coercion or duress.
Cases that were already in progress prior to the recent reversal of requirements, must now reach completion by the end of July this year. All new cases as of the 19th April will now have the legal requirement for a face-to-face meeting with a legal advisor in order to be accepted for equity finance. Despite the changes only coming in this month, the first quarter of 2022 shows that most equity release customers did seek face to face legal advice.
Chair of the Equity Release Council, David Burrowes, commented: “The temporary amendment to our requirement for face-to-face legal advice served its purpose well by protecting customers and maintaining their access to vital funds in trying circumstances.
“The Council’s unique ability to bring together firms from across the market helped to identify a practical solution whereby customers were not cut off from money tied up in their homes, which in some cases was key to accessing care services when they most needed them.
“While restrictions have ebbed and flowed during the pandemic, we are hopeful the worst is now behind us. The time is right to return to the default of in-person legal advice while learning lessons about how technology can best support the overall process and customer experience.”
CEO of Equilaw and non-executive director of the Council, Claire Barker, added: “Independent legal advice is one of the unique distinguishing factors that sets equity release apart from other retail financial services when it comes to customer safeguards and protections.
“Legal firms were able to preserve this important link in the chain throughout the pandemic, despite the adverse operating conditions. Industry collaboration on risk management and sharing of best practice meant we could uphold standards of consumer protection and demonstrate this to lenders and funding partners.
“While face-to-face legal advice remains the gold standard, many uses of technology during the pandemic can continue to benefit customers in the long run. A good example of this is financial advisers using video conferencing to bring family members into conversations about releasing equity or solicitors using online case trackers to liaise with clients.”