Feedback Paper following consultation on Equity Release (2025-06-25)

Summary

This is the GFSC's feedback paper summarising responses to its December 2024 consultation on extending the Lending, Credit and Finance (LCF) regime to cover equity release (ER) products in the Bailiwick of Guernsey. It confirms that the proposed framework, closely mirroring the UK's regulatory approach, will proceed largely as consulted on, with only modest changes to the draft Rules and Guidance.

• Scope: Equity release covers both lifetime mortgages (reverse mortgages) and home reversion plans secured on Bailiwick residential property; retirement interest-only mortgages are treated separately and are not classed as equity release.
• Legal changes: The LCF Law will be amended by regulation to add specific reference to equity release and related definitions; the LCF Rules and Guidance will be amended to add new Parts 7A and 8A, an Equity Release Code of Practice (Schedule 6), and key-facts illustration requirements.
• Advice requirement: All equity release agreements must be advised, and advice must be given by a suitably qualified, locally licensed equity release adviser, despite some respondent objections about market access and competition.
• Consumer protection: Firms are not required to be Equity Release Council members but must meet ERC-derived standards incorporated into Schedule 6, and must treat customers fairly; existing Capacity Law provisions are considered sufficient safeguards for customers with lasting powers of attorney.
• Licensing and fees: Existing LCF Part II licensees wishing to add equity release activities must apply to vary their licence (indicative fee £1,415); new ER provider and adviser fees will mirror existing home finance provider and broker fees, with a 50% discount on annual and application fees for the first three years to encourage market growth; firms with multiple licences pay only the higher applicable fee.
• Customary law and licence exemptions: The Commission will work with the Law Officers of the Crown on customary law changes needed to facilitate lifetime mortgages (home reversion is unaffected), and will publish a revised limited permissions notice.

Changes to the LCF Law and the LCF Rules and Guidance are both intended to come into effect from 1 January 2026, with a revised, marked-up copy of the Rules attached as Appendix 1 to the feedback paper.

Key obligations

• Firms offering equity release products or advice must hold or vary an LCF Part II licence to cover equity release activities.
• All equity release agreements must be advised, and that advice must be given by a suitably qualified, locally licensed equity release adviser.
• Firms must comply with the Equity Release Code of Practice at Schedule 6 of the LCF Rules, including treating customers fairly.
• Firms must provide customers with key-facts illustrations and clear, complete information about equity release products as set out in the amended LCF Rules.
• Existing LCF Part II licensees wishing to add equity release business must submit an application to vary their licence (indicative fee £1,415).
• Attorneys seeking to dispose of a customer's real property under a lasting power of attorney must obtain the Royal Court's permission under the Capacity Law.

Applies to

home finance providers, lenders, equity release providers, equity release advisers, ancillary service providers/brokers, financial advisers, banks holding LCF licences

Deadlines

• 1 January 2026: Changes to the LCF Law amending the framework for equity release are intended to come into effect.
• 1 January 2026: Changes to the LCF Rules and Guidance (including new Parts 7A, 8A and Schedule 6 Equity Release Code of Practice) are intended to come into effect.
• first three years from implementation of the relevant Rules: Discounted (50%) annual and application fees apply for new equity release providers to encourage market growth.