A blog on the Guardian on the topic of equity release suggests that ‘the lending industry is still finding creative ways to part the unwary, the naive and the plain greedy from their cash’, painting a sinister picture of what many on this side of the industry know to be an oft-overlooked, but often entirely sensible, decision for your client.
This wariness may begin to abate, however, as pension reforms announced by Chancellor George Osborne in this year’s Annual Statement have prompted many to predict a rise in the popularity of equity release. Increased demand for borrowing into retirement may prompt more to look to equity release as a solution – and those advisers who offer equity release will reap the rewards.
A recent survey showed that eight in ten (83%) advisers believe there will be an increase in client demand for products that have a guaranteed element in retirement, with almost half of advisers surveyed saying they were considering further qualifications to widen their offering to their clients.
Since April 2014, equity release has been regulated by the FCA, and the Institute of Financial Services now offers an FCA-approved qualification (the ifs Level 3 Certificate in Regulated Equity Release) which means advisers can fulfil all regulatory requirements in this area.
It would certainly make sense for advisers to take advantage of an area which John Charcol’s Ray Boulger said could see an ‘upwards push’ in light of pension reforms. However, at a time when regulation across the board is changing – with the European Mortgage Credit Directive looming on the horizon – it is understandable that advisers who do not currently offer equity release may choose to focus on their existing areas of business in lieu of a ‘jack of all trades, master of none’ approach.
However, this is an area of lending which can no longer be resigned to the sidelines. A growing elderly population coupled with the pension changes coming into effect in April mean that advisers have already predicted growth in the sector. Despite this, however, the Equity Release Council’s figures suggest that while 7,000 advisers have the necessary qualifications, only 2,000 are actively doing equity release business.
Is this low figure the result of a lack of consumer awareness or simply a lack of demand? As Chris Prior’s recent blog on Financial Reporter stated, nobody wakes up thinking ‘I really want an equity release product’.
With greater knowledge in the advisory community would come a fuller understanding of when to offer such a product to a client who may not be aware of its benefits – or, thanks to scare-mongering media, wary of it. A better-informed adviser means a better client offering – and that is surely an obvious choice for any adviser.
