It does however remain an uphill struggle, particularly amongst certain sections of the consumer media who still unfairly assume the worst without understanding the full story. This was made clear to me as I listened to the latest episode of BBC Radio 4’s Moneybox which covered the equity release market, probably due to the catalyst of the recent lending figures which revealed the £1 billion mark had already been broken in the first three quarters of this year.
The programme did not examine why there might have been an increase in equity release activity, but instead focused on two cases studies, neither (in my view) were a fair and balanced representation of the market.
One of the case studies was a couple who had released equity from their property 11 years ago, before regulation of the market. The amount released had been £74k, which had rolled up to £174k on their property which was now valued at £250k. They had hoped to move but their existing provider told them that in order to transfer the plan to a new property they would have to pay half the loan. I don’t believe this is an accurate depiction of the market today.
In addition, throughout the programme not once was the second, lesser known little brother in the equity release market mentioned – home reversions.
Thankfully, Nigel Waterson of the Equity Release Council was also on the programme and brought some balance to proceedings. Somewhat inevitably, however, Nigel was left having to defend products from pre-regulation days and stand up for the entire sector which was apparently summed up by these two individual cases.
It was not an enviable task and Nigel did well to highlight the fact that the equity release sector as a whole has moved on by some degree since those pre-regulation days, that more products are now drawdown, individuals can choose to pay interest, there are numerous protections in place, and yes, providers are actually taking a risk in providing equity release products to customers. A point which is often forgotten.
Picking out customers who have not had a particularly good time of it and laying the blame for that at the door of the equity release sector, was not particularly illuminating nor did it analyse just why an increasing number of customers are looking at using equity release. It suggested instead that most equity release customers are being ripped off.
The truth is far different – equity release is providing a lifeline for many individuals. Think of those stuck on interest-only mortgages with no money to pay off the capital. The Moneybox programme did not highlight the lack of options for people in this situation or the fact that many people use equity release to fund their lifestyle, or ensure they are more comfortable than their initial retirement income would allow them to be.
Perhaps next time if we are going to have a story driven by case studies, one of them might be a more positive look at a customer’s equity release experience. And there are plenty in this position. Customers are not having the wool pulled over their eyes when it comes to their responsibilities with an equity release product – advisers and providers have to be absolutely certain the customer is clear about what they are signing because the consequences in terms of complaints and redress are there for all of us to see. However, what this does show is the ongoing work everyone in the equity release community has to put in with the media and clients if we are to become a more accepted part of the financial services fraternity.
