Equity release has enjoyed much success over the past few years and garnered rightful plaudits for the industry-wide battle for further customer safeguards. However, there still remains a confused element of our customer base who just don’t understand what equity release is. Equity release itself, the name that is, can be a rather confusing umbrella term. Many customers simply do not know what equity is, the lifetime of lifetime mortgage can scare people away and don’t get me started on the term reversion.
As a whole, the industry is pressing on swiftly towards mainstream acceptance, but before we get to the mainstream, we must overhaul the widespread confusion that remains prevalent amongst our customers.
The term ‘equity’ seems like a logical place to start if we are to overturn the confusion in the industry. The layperson simply does not know what equity is – and that’s an obvious problem.
But why should they? The 21st century is plagued by confusing terms, names, brands and slang, so when we work in an industry whose clients tend to prefer the traditional over the technical, why do we still use confusing terminology?
Our customers understand terms like ‘lending’ and ‘retirement’, so whilst this is a radical thought, why not replace and rebrand the entire industry? Equity release itself has evolved and changed over the years, so a change of terminology may be fitting in with the trend. ‘Lending in retirement’ would be my suggestion - simple and jargon-free, but others may feel differently. To bust the jargon throughout the industry and help the customer get a better understanding of what our products really are, the initiative must come from the top-down.
Secondly, the servicing of interest on equity release products has, without doubt, been one of the most exciting innovations the industry has seen in the past few years, and a re-brand of our primary products should reflect this change. To help our customers understand the industry, it would be helpful if the products did what they said on the tin. The term - lifetime mortgage - does not truly reflect the flexibility that encompasses modern equity release products. As with equity release, lifetime mortgage has become an umbrella term for an ever-growing and evolving suite of products. As interest-servicing products become more popular and developments continue, a clearer use of terminology would be beneficial for all. This change could help advisers explain the products more easily and therefore aid in the clearing of confusion that remains in our customers minds.
The industry has gone a long way over the past few years and I expect this trend to continue. However, there still hangs this cloud of confusion throughout our customer base that starts with the terminology we use and ends with many prospective customers being put off at the outset. To catalyse further success in the industry, it may be an idea to bust this jargon in order to help advisers paint the clearest picture possible and help customers obtain the right image of a very useful product.
