Reclaiming the term equity release
David Forsdyke is the equity release development manager for Access Equity Release
Equity Release has been through a huge transformation since it was first introduced in the late 1980s.
As an unregulated, relatively untested area back in those early/dark days, equity release became associated with a series of products in the 1990s that turned out to be very poor value for consumers. Its reputation was rightly in tatters and for some, it is burned in the memory.
Even though equity release products today bear little resemblance to the discredited products of the past, many people still associate it with poor value. It is a hard legacy to shake off.
This has left the industry with something of an identity crisis. There has been much discussion about finding a new name for these modern products in order to disassociate them from the words “equity release”.
Euphemistic descriptions such as “later life lending”, “lifetime lending” and “retirement mortgages” have become common.
However, we are beginning to witness a shift. Equity Release is regulated by the FCA, the value in products is clear, product innovation is benefitting consumers and The Equity Release Council is doing a great job in raising awareness of consumer protection. More personal finance journalists are taking on the subject with a balanced and informative agenda. The pensions shortfall has also raised the profile of equity release as people begin to recognise the need to include property wealth in their long term planning.
When we launched Access Equity Release earlier this year, (a new advice service from the well-established mortgage intermediary firm Your Mortgage Decisions Ltd) the name of the company proved to be the most difficult debate. Ultimately, we decided not to beat around the bush. We’re equity release advisers who want to give consumers access to the best advice. That’s what we do. Why hide it?
The equity release market is growing and demographic evidence of longer lives, squeezed pension pots and younger generations unable to make it onto the property ladder, means growth is likely to continue. People want to know more about equity release.
I’m confident that as demand grows and word spreads, modern day equity release will be recognised as good value for the right customers – the reputation it has earned.