The Council proposes that HM Treasury’s oversight of other relevant departments – including the Department for Work and Pensions, the Department for Communities and Local Government and the Department of Health – combined with its responsibility for financial services, makes it the natural choice to coordinate policy on equity release.
The report also identifies where Government policy could do more to consider equity release as a way of meeting people’s retirement needs, and where regulation is providing direct challenges to the development of the sector. It argues that a cohesive approach across departments is necessary to avoid unforeseen consequences and ensure the maximum benefit for consumers and Government.
The White Paper includes seven specific recommendations, namely that Government should:
- consider the role of equity release as part of its strategy for addressing the challenges of an ageing society, ensuring that people are able to utilise housing wealth to improve their income and wellbeing in retirement where appropriate;
- expand the scope of the Pension Wise service to enable users to understand how accessing housing wealth may provide solutions to satisfy their objectives;
- consider how equity release can be utilised to help people pay for home care – providing financial resources which can help people retain ownership of their home and stay living in it for longer;
- in conjunction with local authorities and other stakeholders, develop clear pathways for local authorities to use to help people who are seeking support on financing care services understand when they should access regulated financial advice and how they should go about doing so;
- develop a range of case studies to illustrate best practice on referral to financial advice on care funding, which would complement the guidance on the implementation of the Care Act;
- use the Financial Advice Market Review as an opportunity to ensure that people nearing retirement are able to access independent financial advice, which allows them to consider the full range of relevant issues – including retirement funding, paying for care, home adaptations and leaving money to children and grandchildren
- ensure the Financial Conduct Authority’s review of the equity release market is wide-ranging and considers the impact of the regulatory framework on the equity release market, as well as other potential barriers to increasing the size of the market.
Nigel Waterson, Chairman of the Equity Release Council, commented:
“The equity release sector is growing fast, and is likely to become even more popular in the next few years. This growth is driven by a range of factors – so-called “interest only prisoners”, the challenges older customers sometimes face in accessing standard mortgages, and care costs. And many over-55s continue to access their property wealth to improve their homes, help family members or enjoy foreign travel.
“It is therefore all the more important that Government and regulators do more to encourage responsible equity release. We urge the Treasury to become our sponsor across Whitehall. And we are delighted that the Work & Pensions Select Committee have just in the last couple of days endorsed our view that the Pension Wise guidance be extended to cover housing wealth.”
Lord Lipsey, who spoke at a Westminster briefing yesterday attended by representatives from industry and Parliament, commented:
“The government’s sneaked-out decision to ditch all the key Dilnot reforms has dealt a body blow to many pensioners. In future it is even more important that government tries to get its act together over equity release, so its potential to help people with their incomes in later years can be realised.”
Andrea Rozario, Chief Corporate Officer at Bower Retirement Services, added:
“Property wealth is already playing a major role in enhancing standards of living in retirement as the growth of the equity release market demonstrates and the Council is right to press the Government to recognise that.
"To maintain the momentum there is a real need for more competition and innovation in the plans available to meet the needs of homeowners, but equally Government can play a more active role in highlighting the useful role of equity release in the many aspects of funding retirement not least the cost of care”
"But the key to it all is highlighting the role of independent specialist advice and the Financial Advice Market Review is a real opportunity to make the case."
