Independent legal advice and the role of solicitors was front and centre during the Equity Release Summit.
Specialist legal firm Adlington Law was the headline sponsor and the event provided the launch pad for the Council’s legal guide to equity release.
The guide was produced by the Council’s legal forum, which includes Adlington Law managing director and solicitor, Carol Nuttall.
Addressing delegates in the main hall, Carol set out some of the reasons for producing the guide.
“Any solicitor who’s qualified can go into any area of law. Whether they’re any good at it is another question,” said Carol.
“When I first came into equity release there was no guide, it was very much learn and ask questions and it was difficult.
“We’ve put together the guide, not to tell people how to do our job, but to give them an indication of what is required.
“It means that if a high street solicitor is instructed there is a reference guide there.
“Ultimately this is going to help protect the client but the knock-on effect is it will help protect the industry.
“It’s all about doing everything we can to ensure that the industry carries on moving forward.”
The Council has required all equity release customers to receive independent legal advice since it launched as Safe Home Income Plans, in 1991.
That safeguard was strengthened further still, around 2011, when it was mandated that all customers must have at least one in person meeting with a solicitor.
“We have our own solicitors who go out. They will usually go to the client’s house and make an assessment,” said Carol.
“They can assess whether the person understands or whether they’re just nodding and pretending that they understand.
“They can see if there is a vulnerability. Sometimes vulnerabilities can be hidden and sometimes you need to speak to the customer more to uncover it.
“That’s where the specialist solicitor can really help. A general solicitor can do legals, they can pick up a file and do what’s required, but a specialist solicitor will prove their value time after time.
“They will see if there is a vulnerability, if there is some duress there, if there is any undue influence and they’ll be able to flag it.”
To support the legal guide to equity release the Council has also produced an insights report, which examined more than 300 cases of where the customer was vulnerable. Among these, the research highlighted health (44%) and capacity (23%) issues as the most common types of vulnerability identified.
Carol said: “In practice, health vulnerabilities can come in many different ways, we can have clients that are very poorly, that have had strokes and they may struggle to communicate with you.
“Obviously there’s health incapacities like deafness or being partially sighted. Then we get down to those illnesses that are associated with the older generation, like dementia and Alzheimer’s disease. People that don’t have the capacity to make financial decisions.
“We’re not saying that that stops equity release. If that person has a lasting power of attorney then we can proceed.”
The insights report found that over three quarters of cases (78%) where the client was flagged as potentially vulnerable were able to proceed with additional support.
Of those where it was not possible or appropriate to proceed, capacity (25%), health (25%), duress (16%) and undue influence (10%) were the primary vulnerabilities identified.
Carol said: “With duress you really are looking for someone who is pretty much being forced into doing it. For instance, if a child putting pressure on a parent.
“If a child is in financial difficulties and they’re saying to their parents ‘if you don’t do this, I’m going to lose everything.’
“It’s about building up that level of trust so that you can really identify what’s going on. That’s when independent legal advice is so important.”
- Download the insights report here.
- Download the legal guide to equity release here.
