Equity Release - Regulation
Understanding your options
Under the overall heading of equity release, there are two main types of schemes; these are known as Lifetime Mortgages and Home Reversion Plans. There are important differences and it is vital that you explore both options before making a final decision.
Because of the important nature of the schemes, regulation is, quite rightly essential, all companies offering this type of scheme must be authorised and regulated by the Financial Services Authority, and in addition to this, a professional body, known as SHIP (which stands for Safe Home Iincome Plans), was established some time ago to provide prospective borrowers with more security and reassurance.
Financial Services Authority (FSA) Regulation
The providers and advisers of equity release schemes - both lifetime mortgages and home reversion plans must be authorised and regulated by the FSA and have to meet the standards they set.
All regulated firms offer a second level of contract via the Financial Ombudsman Service should you require it.
Self Regulation - Make sure you choose a member of SHIP
When considering the type of plan it is important to know whether the provider is a member of Safe Home Income Plans (SHIP). SHIP is a company supported by leading providers of home income and equity release plans. The company formed in 1991 and is dedicated entirely to the protection of plan holders and the promotion of safe home income and equity release plans.
SHIP members must agree to adhere to the following code of practice:
- To provide a fair, simple and complete presentation of their plans
- To ensure the client’s legal work is performed by the solicitor of his or her choice
- To clearly state the main cost to the householder's assets and estate
- To provide a 'no negative equity' guarantee - this means that you will never owe more than the actual value of your home
SHIP also guarantees that you will:
- Have the right to live in your property for life
- Have the freedom to move to a suitable alternative property without financial penalties
- Receive either a cash sum or regular income payments
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