The problems that faced those going into retirement have been accentuated by coronavirus, with some dipping into their pension pots or forced into an early retirement.
As a result, later life lending has become even more pivotal in mainstream retirement planning.
At the start of this turbulent year, the Equity Release Council marked a key milestone as we evolved our standards to a principles and outcome-based approach. This was a major step toward achieving a market that is future proofed for changing circumstances.
Importantly, they reinforced the fundamental need for effective frameworks to identify and respond to vulnerability.
Vulnerability can be sparked by factors including physical or mental health, age, bereavement and financial difficulties – which has become particularly acute during the pandemic.
Next on the agenda for the standards board was working on proactive initiatives to help support consistent standards of advice, to encourage best practice and ensure compliance.
While work on these schemes was underway, the Financial Conduct Authority (FCA) published a report highlighting that, while “equity release was working well for many consumers”, work was needed in the advice sector to ensure best practice was followed at all times.
The FCA’s ‘Dear CEO’ letter that followed highlighted some concerns over the potential for unsuitable advice.
These FCA announcements made the council’s initiatives even more timely, since they go a long way to reinforce our safeguards in the advice space, with vulnerable customers front of mind.
Over the summer, the council launched its Updated Checklist for Advisers, highlighting some of the most important factors to consider during the advice process.
More recently, we published our Best Practice Guide for advisers to complement the checklist, further reinforcing best practice across the industry. These initiatives fundamentally encourage a more personalised level of advice, ensuring all areas are considered and ultimately leading to the best result for the consumer.
Keeping on top of things
Nevertheless, in consumer protections you can ill afford to be complacent.
Standards in the later life lending industry must be continually reviewed and revised to ensure the best outcomes for customers. Innovation is also increasing as providers look for new ways to help those in later-life fund increasingly squeezed retirement finances.
Therefore, the council will always work closely with the regulator – along with other stakeholders – to look ahead to identify and address potential issues before they arise.
We remain proud of our standards – which build on statutory regulation to deliver the highest form of protection for any later life property-based loan – but recognise they must always evolve with the changing landscape.
As we look to another year, the council will continue its work to implement and supervise the standards into the future, to ensure those considering equity release are met with the very highest consumer protection.