Equity Release & the Financial Conduct Authority

Best Equity Release is a trading style of Platinum Financial Consulting LTD
AUTHORISED & REGULATED BY THE FINANCIAL CONDUCT AUTHORITY

What the Regulator demands from your Equity Release Adviser & the service we give you.

Equity Release in the UK is regulated by the Financial Conduct Authority (FCA). Only firms that are regulated by the FCA can advise or sell equity release schemes.

The FCA are very keen that customers get appropriate financial and legal advice. For this reason we will not sell equity release to a customer unless they have received advice from one of our advisers who is also a member of the equity release council. Your adviser will also hold a specialist equity release qualification.

In complying with the Equity Release Council Code of Conduct, the adviser should make you aware that you can use a solicitor of your choice, however if you don’t have one, they may recommend a solicitor from a panel. The solicitor will need to certify that you understand the risks and benefits of the specific plan BEFORE the contract can start.

If things go wrong, then the FCA will expect the adviser to take all reasonable steps to put matters right. If you are still not satisfied you can take your concerns to the Financial Ombudsman.

Firms selling or marketing equity release schemes must make sure that advertisements, product brochures and other promotions (such as this website) are clear, fair and not misleading. If you are concerned about any of the information contained on this website, please let us know !

A number of very specific disclosures and information must be provided. They are :

		the advantages and disadvantages of particular features of the equity release schemes have to be equally stated
		with lifetime mortgages, the firm must give the annual percentage rate (APR) whenever it provides any price information
		the adviser must check whether using the scheme will affect your tax bill and entitlement to benefits
		if there's a fee for advising on or arranging your lifetime mortgage, the actual or typical fee must be quoted

Besides any brochures or provider information they may give you, you must be given a “KeyFacts” document that should explain in simple language the important features of the product you are interested in. They will explain the cost and charges of the product, how the product will operate, what happens when you die, and so on. These documents are in standard format making it easier to compare products from different providers.

	What should you expect from your adviser ?

While at this stage you may feel that Equity release is suitable for you, a good adviser will test this with you and possibly come up with alternative options which could be more suitable for your needs.

	They should check that any course of action you take will not impact upon any state benefits you may be receiving.
	They should encourage you to talk to your family. While you may want to keep matters private, it could cause problems later on if your children lose your property when they could have been willing and able to help you.
	They should explain all the various types of product that allow you to take money out of your property and not just the one you were interested in.
	They should clearly explain both the advantages and risks of the plan and be satisfied that you understand them.
	They should consider your wider financial circumstances and not just focus on equity release.
	They will issue you with a report explaining the product and advice they gave you and why it is suitable for you.


	A Simple Guide to Cost

An Equity release loan is simply a different type of Mortgage. Just like a mortgage - equity release has very similar costs and charges.

Here we discuss all the charges you should consider, and what they are for.

The figures we quote are examples of average costs and are not specific to any product or provider. The product your adviser recommends may have different charges associated. In some cases the product provider may have special deals where some of these charges are waived or paid for you.

Before you do business your adviser will explain all the specific costs of your product to you.

Application Fee

This fee is payable to your product provider. It is used to pay for their administration in considering your application and setting up your equity release loan.

An average application fee would be approximately £500. Many providers will add this to the value of the loan.

Valuation Fee

You will need to demonstrate to the lender that your home is worth the amount you say it is. An independent survey will therefore need to be conducted to value your home.

Depending on the value of your property you should estimate between £230 - £500 for this cost. As this is payable in advance and it is not normally possible to add this to your loan.

On occasion providers may offer a FREE valuation.

Legal Fees

A legal process know as 'conveyancing' needs to take place to draw up the legal documentation between you and your equity release lender.

Solicitors typically charge around £500 for this service.

Some lenders will offer a FREE legal service to you. In such a case the provider will use a solicitor from a panel and you would not be able to appoint your own solicitor.

Adviser Fees

Your adviser will charge you for their advice and service. From this amount they may also have to pay various compliance and marketing businesses.

The typical equity release adviser fee is 2% of the value of the loan. Most adviser fees are added to the value of the loan.

Interest

Even though you will make no payments during your lifetime (unless you want to) you will never the less be charged interest on the amount you have borrowed.

Each year the amount of interest is added to the outstanding loan. This means that the outstanding interest becomes part of the loan. As each year passes you pay interest on the original loan plus the interest charged during previous years. This is known as 'rolling up' the loan.

Typical interest rates range from 6% - 8% per annum.

Notes : The fees quoted above are for example purposes only. The product recommended by your adviser may have higher or lower fees. You will also be shown the annual percentage rate (APR), which shows the cost of the loan once all costs and charges have been incorporated.

Where fees are added to the loan then interest is also payable on these fees and this part of the debt increases in line with the 'roll up' process discussed above. This means that you will pay more for these fees than you would have if you had paid them direct and not added them to the loan.