Nigel Waterson, chairman of the Equity Release Council said the product is part of one of the most rigorously regulated sectors over the past 24 years through both its own product code and FCA regulation obliging borrowers to seek advice.
“This regulation it could be argued, has constrained the sector’s growth by restricting the number of providers choosing to enter it but we believe that consumer protection is at the heart of meeting consumers’ needs so far and must remain paramount in all future considerations,” he said.
He continued: “Any lingering poor perceptions of the quality offered by equity release plans are extremely outdated for the sector has never been in better shape in terms of consumer protection, consumer choice and consumer confidence.”
Yesterday at the FCA’s annual mortgage conference, the regulator said more debate was needed on the viability of expanding the equity release market and the products it provides for customers.
Christopher Woolard, FCA director of strategy and competition, queried whether equity release’s tarnished reputation had a detrimental effect on the number of firms entering the market as well as consumers willing to buy it.
Woolard admitted with average UK pension pots of £30,000, property assets worth roughly seven times that number means equity release has the power to make a ‘significant difference’ to people’s lives.
However, he added: “Yet, in the not too distant past, equity release became a dirty word. While we have seen a combination of regulation and industry-led initiatives to help clean up the market, some will argue that the costs of equity release, both up front and compounded over time, are relatively high for the individual, and that the previous image has stuck.”
Jeremy Duncombe, director, Legal & General Mortgage Club, said equity release is et to become an intrinsic part of financial planning in the UK.
“Those who are asset rich but cash poor will increasingly be looking for new ways to release some of their money as they move into retirement. Any action the regulator can take to stimulate competition and broader participation in this market is therefore welcome.”
