The study took an in-depth look at a sample of more than 300 cases from last year where the customer had been identified as potentially vulnerable.
Among these customers, the research highlighted health (44%) and capacity (23%) issues as the most common types of vulnerability identified as part of the independent legal advice process. In almost a quarter (24%) of cases where vulnerability was highlighted, the legal adviser identified more than one vulnerability.
All customers who take out equity release must receive independent legal advice to ensure they fully understand the risks and implications of their choices, the product details and are free from duress. The legal adviser is responsible for advocating for their client and should a vulnerability be identified, they will help them to obtain the specialist support they need to decide whether equity release is right for their individual circumstances.
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.
David Burrowes, Chair of the Equity Release Council, said:
“Independent legal advice is an essential part of the process of releasing equity, and it is vital we have the knowledge and skills in place across the legal sector to reflect and support the modern market.
“Our new guide will help to ensure a common understanding of the role of legal advice and its contribution to ensuring good consumer outcomes. It will also challenge more firms to consider whether they can offer this service to customers and what lessons they might learn from those who already successfully operate in this space.
“Meanwhile, our members’ insights, gleaned from supporting vulnerable consumers show the benefit of involving specialist legal advice in important financial decisions, particularly in later life when customers can be more prone to vulnerability.
“Equity release can be a transformative financial product which, when used appropriately, can provide an important lifeline for pensioners, improve living standards and enhance the lives of their families.”
