In Q2 2017, over-55s withdrew a total of £701m from their homes: the highest figure in any single quarter since The Equity Release Council started recording quarterly activity in 2002. It represents an increase of over a third (36%) in the value of lending when compared to Q2 2016.
Some market commentators fear that such a robust performance is the result of aggressive selling tactics. James Daley, managing director at Fairer Finance, was quoted as saying: “Seeing an increase this sharp rings alarm bells. It suggests people are starting to sell aggressively in the market. Some of the commission levels are out of control, in the tens of thousands of pounds.”
Responding to the criticism, Nigel Waterson (pictured), chairman of the Equity Release Council, said: “The notion that the growth of equity release lending is the result of ‘aggressive’ sales practices is wholly unfounded. The process of taking out an equity release plan is underpinned by very robust standards, whereby customers are guaranteed three levels of protection encompassing FCA regulated financial advice, face-to-face legal guidance and product safeguards.”
He added: “The legal safeguard specifically ensures that the rights and obligations of any recommended plan have been fully explained, and that the customer is under no undue influence or duress to proceed. Such practices ensure the customer comes first and the idea that commission-levels are out of control is no more than conjecture.”
The UK faces a number of challenges including an ageing population, rising social care needs with declining public resources and inadequate pension funds.
Waterson said: “Equity release can play a key role in helping to meet those challenges.”