Since 1 June 2008, the provision of all equity release products have been subject to the Central Bank's Consumer Protection Code (the Code). As defined in the Code, an equity release product means a lifetime mortgage or a home reversion agreement. The Central Bank Act 1997, as amended by the Markets in Financial Instruments and Miscellaneous Provisions Act 2007, provided that, with effect from 1 February 2008, home reversion firms have to be authorised by the Central Bank. There are two authorised home reversion firms in this country — Residential Reversions Limited, trading as "Sixty Plus Finance"; and Shared Home Investment Plan Limited, trading as "SHIP".
In addition to the General Principles set out in the Code, specific provisions apply to equity release products. In this regard, Chapter 4 — "Loans and Equity Release" — stipulates that entities regulated by the Central Bank must:
advise the consumer of the consequences of equity release products including details of the total costs involved, including all interest, charges and the effect on the existing mortgage, if any;
ensure that consumers are made aware of the importance of seeking independent legal advice; and
include the following warning on any information document, application form or any other document given to the consumer in connection with an equity release product: "Warning: Purchasing this product may negatively impact on your ability to fund future needs".
This warning must also be included on any advertisement for an equity release product. The Central Bank has advised that additional measures regarding vulnerable consumers will form part of the Central Bank's revised Consumer Protection Code that will be issued later this year.