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Code of Practice

Each member of SHERPA agrees it's Home Equity Release Plan(s) will adhere to, and be measured against the following Code of Practice in dealing with New Zealand seniors, their families and their advisers. As a minimum, members of SHERPA shall:

  1. Treat all borrowers with respect and dignity
  2. Participate in an approved External Dispute Resolution Scheme
  3. Ensure that all plans carry a clear and transparent "loan repayment", "no negative equity" or "non-recourse" guarantee. That is, the borrower(s) will never owe more than the net realisable value of their property, provided the terms and conditions of the loan have been met. The guarantee will include guaranteed occupancy for life, no requirement to repay until ceasing to occupy and transferability without penalty to another property that meets lending criteria.
  4. Strongly encourage borrower(s) to discuss the transaction with family members and to seek independent financial advice from a suitably qualified financial adviser.
  5. Provide general advice and recommend borrower(s) consider the impact, if any, on their state benefits.
  6. Ensure that the borrower(s) obtains independent legal advice performed by the solicitor of their choice. The solicitor must not act for the lender. Prior to completion the member must receive a certificate from the solicitor confirming the borrower's legal competence and that the product's benefits and obligations have been explained to them. All members must have robust review processes to ensure that the solicitor is involved as appropriate in subsequent drawdowns and further advances as the borrower's circumstances may have changed.
  7. Clearly and accurately identify all costs to the Borrower(s) associated with the transaction, including any transfer of current or future equity interests in the Security Property to the Member. In addition, the Member must arrange disclosure of the form and quantum of any remuneration or benefit payable by the Member to any employee, adviser, agent or representative for introducing, referring or advising a Borrower.
  8. Not assert or imply to a borrower(s) that they are obligated to purchase any other product or service offered by the member or any other company in order to enter into a Home Equity Release Plan.
  9. Provide in writing a fair and complete package of home equity release documents, covering the benefits and obligations of the plan. This will include making available to borrower(s) 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 written under the Credit Contracts and Consumer Finance Act 2003 irrespective of the use of proceeds.

Each associate member of SHERPA agrees to support the above Code of Practice and, if they are a distributor, will support and recommend Home Equity Release Plans that comply with the Code of Practice.