June 6, 2013

Chris Prior is Manager Sales and Distribution at Bridgewater Equity Release


Despite the best efforts of all those involved in the sector, the equity release market sometimes suffers as the result of a lack of awareness from a number of important parties including – but not limited to – the customers themselves, intermediaries and the Government.

This disparity between the unfulfilled potential of the industry and its current capacity was highlighted again recently by our own research and by comments made by Nigel Waterson, chairman of the Equity Release Council, at the Retirement Income Solutions Forum.

Waterson cited the Government’s lack of joined-up strategy regarding the different areas that equity release reaches into – namely financial services, as a resource for older people, and as a method for funding retirement or long-term care – as something of an obstacle for the sector and described the current situation as a “policy vacuum”.

The Council’s current discussions involve liaising with the Department of Health, the Treasury, the Department of Communities and Local Government as well as the Department for Work and Pensions so it is perhaps no surprise that the message about the benefits of the equity release market ends up somewhat diluted. Waterson suggested that it would make sense for the Treasury to assume departmental responsibility for equity release which would allow it to bring the various public policy aspects under one roof.      

With the long-term care debate still ongoing and Office for National Statistics’ latest labour market figures providing a pertinent backdrop – a record 980,000 of over 65s are still in employment – the Government can’t afford to keep avoiding the issue of older individuals facing financial quandaries.

The equity release market is not asking for a hand out, but simply an open discussion on how equity release can help public policy to serve an ageing population and assistance in raising awareness of the advantages of releasing equity.

It’s not just the State that needs to get up to speed either. Our own recent survey of advisers found that they are still wrestling with a number of customer misconceptions about equity release.

Chief among these is the fear that by opting for an equity release plan, clients are somehow giving away their children’s inheritance, followed closely by the mistaken belief that clients will lose their home by releasing equity.

The no negative equity guarantee that providers subscribe to is also obviously not common knowledge as a number of potential plan holders expressed concerns that they would end up owing more than their home was worth.

Advisers were also asked to rate the general level of knowledge clients had about equity release and while 58% had heard of the plans and had a basic understanding, almost a fifth had no knowledge at all.

There is no doubt that the equity release market continues to develop, but if it is to finally push through the glass ceiling currently constraining it from fully realising its true potential, then there is still work to be done in terms of raising awareness and knowledge levels.

All stakeholders have a responsibility to help continue this campaign, but getting the Government fully onside really would be a tipping point that could help the other pieces fall into place far more easily.      




Sign up to our daily email