When equity release schemes were first introduced in the 1980s and 1990s, horror stories circulated and many people, especially older people, have been put off as a result. When the schemes first came into being there was no regulation and stories of older people facing impossible struggles to pay off spiralling debts hit the headlines on a regular basis. The truth is that the world is a completely different place now and regulation is much more stringent. However, it is important to be vigilant and do your study before signing to an equity release scheme. Home reversion plans and lifetime mortgages are now kept in check by the Financial Services Authority. Also, an independent organisation known as Safe Home Income Plans (SHIP) has been set up to monitor the industry.
Although changes in the regulation of equity release schemes have ensured greater safety for consumers, this does not mean that the plans are beneficial for everyone. It is important to realise that in many cases you may be giving away a valuable asset in trade for a fee inferior to the market value.
As a consumer you have rights and providers are required to comply with criteria set out by the Financial Services Authority. These are designed to stamp out many of the problems experienced by people in the 1990s when equity release schemes were not regulated. As a participant in an equity release scheme, you have the right to seek independent and professional legal advice. You also have the right to remain in your home and you should never be forced to move or sell your home as a result of being involved in an equity release scheme.
Providers are required to comply with standards set out by the FSA, so if a provider fails to meet the required standards the Financial Services Authority will take action. As a consumer using services regulated by the FSA you also have the right to seek advice from the Financial Ombudsman Service. You can find out more about equity release and your rights as a customer by visiting the Ship website.