The Senior Australian Equity Release Association of Lenders (SEQUAL) was formed early last year in order to set voluntary codes of conduct for its member organisations — providers of home equity release products.
Each member of SEQUAL agrees its equity release products will adhere to, and be measured against, the following code when dealing with senior Australians, their families and advisers.
As a minimum, members of SEQUAL shall:
1. Treat all borrowers with respect and dignity.
2. Participate in an Australian Securities and Investments Commission approved External Dispute Resolution Scheme.
3. Ensure all products carry a clear and transparent no negative equity or non-recourse guarantee — that is, the borrower will never owe more than the net realisable value of their property, provided the terms and conditions of the loan have been met.
4. Strongly encourage borrowers to discuss the transaction with family members and seek independent financial advice from a qualified financial adviser.
5. Strongly encourage borrowers, if entitled to Centrelink benefits, to discuss the transaction with Centrelink to ensure they fully understand the impact.
6. Ensure that the borrower obtains independent legal advice performed by the solicitor of their choice. Prior to the completion of the transaction, the borrower or their solicitor will be provided with full details of the benefits the borrower will receive, and the obligations they are entering into.
7. Clearly and accurately identify all costs to the borrower that are associated with the transaction.
8. Not assert or imply to a borrower that the borrower is obligated to purchase any other product or service offered by the member or any other company in order to enter into an equity release product.
9. Provide in writing a fair and complete package of equity release documents, covering the benefits and obligations of the product. This will include making available to the borrower and their advisers a tool illustrating the potential effect of future house values, interest rates and the capitalisation of interest on the loan.
10. Ensure all loans are underwritten with the Privacy Act, Trade Practices Act and any other relevant code or regulation at law.
