Is Equity Release a Scam? Is it Safe?

Citizens Advice have reported that over 36 million brits have been targeted by a scammer so far this year. Although the most prevalent method used for scamming is the telephone, some comparison sites have fallen victim to bogus companies posing as legitimate on their sites. With over 55’s most likely to be targeted by these fraudsters it’s well worth knowing if equity release is a scam.

Equity Release has been around since 1965 and first became regulated by the FSA in 2004. When done with the correct advice and through a reputable company, Equity Release is a perfectly legitimate and legal way of accessing money tied up in your home. 

In this article, we’ll show you how you can avoid any potential pitfalls and make sure that you’re dealing with a legitimate company when you’re considering Equity Release.

How to tell if an equity release company is legitimate

Equity Release is a highly regulated financial product in the UK. Your first port of call when you’re considering whether or not you should use a particular company is the Equity Release Council.

Whether or not the company you’re considering has signed up to the voluntary code of practice.

You’re next port of call is the Financial Conduct Authority (FCA), where you should check licencing and accreditations:

With the advent of GDPR (General Data Protection Regulations) there are big question marks for consumers over whether or not cold calling (unsolicited contact) is legitimate.

The FCA states in its handbook that:

“Prohibition on unsolicited real time financial promotions to customers

A firm must not make an unsolicited real time financial promotion of qualifying credit, a home reversion plan or a regulated sale and rent back agreement unless the customer has an established existing customer relationship with the firm and the relationship is such that the customer envisages receiving such financial promotions.”

Source: FCA Handbook

The handbook clearly states that ‘A firm must not make an unsolicited real time financial promotion of qualifying credit, a home reversion plan’ – This covers equity release where a ‘real time financial promotion’ is ‘an invitation or inducement to engage in investment activity’. Indicating that it is illegal for a company to cold call to try and sell you equity release services.

However, what we do find is that companies are able to find loopholes within the legislation whereby they can legitimately contact you.

If a company is reputable, there’s a high likelihood they will not use cold calling as a means of generating new business.

Is Equity Release a Scam? Is it Safe?

How to avoid equity release scams

  1. Avoid equity release calculators that take significant personal information. A perfect example of what’s right is our equity release calculator.
  2. Always speak to family members and friends that have been through the process themselves.
  3. Never take unsolicited calls on the subject.
  4. Always do due diligence on the company using the methods above
  5. Get a number of quotes.
  6. Look at the service being offered as a whole, it should be holistic and consider your situation now and in the future. It’s not just an exercise in releasing funds.

What service do you offer for Equity Release?

Before Considering equity release there are some viable alternatives that you should definitely consider. We’ve put together an article on alternatives to equity release to give you an idea of things you can consider.

Our advisors are specialists in understanding the needs of our clients when it comes to managing their retirement.

We don’t work to sales targets for bonuses and commissions meaning our advice is independent and impartial.

We know equity release can be a big decision for you to make, which is why we’ve teamed up with the UK’s number one equity release adviser and member of the Equity Release Council, Age Partnership. If you’re considering equity release we offer a free initial consultation to establish if equity release is right for you. Check out our Equity Release Advice page to find out how you can get started.

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Free Equity Release Calculator


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