Steve Ellis and Clare Singleton take new roles at top of L&G’s retail retirement business
Steve Ellis has been appointed as chief executive officer of Legal & General retail retirement living solution – a new division for the organisation which will be aiming to find and fund care for customers using its Care Sourcer platform.
Claire Singleton, currently CEO of Legal & General’s mature savings business (pictured), will succeed Steve Ellis as CEO of Legal & General Home Finance.
Both will report into Chris Knight, CEO of Legal & General retail retirement.
Ellis will start his new role at the beginning of April and Claire will take up her post at the end of the year following the completion of the transfer of the mature savings business to ReAssure, part of the Swiss Re Group.
Singleton’s appointment is subject to regulatory approval. Chris Knight will manage the Home Finance business in the interim period.
Ellis has been with the organisation since 2007 and has previously run a number of operational areas in corporate risk and annuities.
Singleton has been the CEO of the mature savings business since July 2018, having joined in 2011 from US law firm Jones Day.
She has worked in a variety of legal roles within the group, most notably as general counsel for retirement and then group, and Legal and General Capital.
Investment in Care Sourcer
Legal & General retail retirement living solutions will focus initially on helping customers find and fund the care they need for themselves or their elderly relatives.
L&G said its investment in Care Sourcer, a platform for the care market, would be a key focus. Ellis will be joining the board of Care Sourcer and will work with the existing executive team lending his expertise in scale and disruption.
Nigel Wilson, group CEO of Legal & General, said: “Claire and Steve have done great jobs in mature savings and Legal & General Home Finance.
“We want people to achieve longer, happier, healthier lives in retirement, but finding and funding care is the elephant in the room – it is a broken market that needs to be fixed. This is precisely the kind of challenge where Legal & General’s inclusive capitalism, our brand and balance sheet can make a difference.”
Steve Ellis said that he is looking forward to resolving the issues in UK care funding and provision.
Claire Singleton said that she is excited about joining Legal & General Home Finance later this year.
She added: “My current focus is on achieving a successful completion of the transfer of the Mature Savings business to ReAssure who will be an excellent steward of the business. As well as providing a smooth experience for our customers, my team and I are committed to supporting our employees through this transaction.”
Lenders must tackle changing retirement and support brokers in later-life market – Ellis
For us as advisers and lenders, the task is to understand these plans and deliver options that can help customers meet their needs for retirement.
The changes which the Financial Conduct Authority (FCA) made to Retirement Interest-Only (RIO) mortgages were a welcome move that has been followed by a wave of RIO product launches.
Separately, lenders have also looked to the lifetime mortgage market to launch more flexible solutions that allow customers to make regular, monthly interest repayments.
So the last year has seen the market step up to give more support to more retirees, but we’re still far from mission accomplished.
Falling pension wealth
Whether it’s the end of final salary pension schemes or longevity, many more people are approaching retirement with smaller pension pots that they now need to make last longer.
In fact, the FCA previously found that nearly a third of UK adults have no private pension and even plan to rely solely on their State Pension.
These shifts in retirement have undoubtedly helped to grow the retirement lending market, with more and more consumers looking to their housing wealth to help pay for the retirement they want.
However, the near £4bn market we saw in 2018 remains just a drop in the ocean compared to the £1trn of housing wealth in the hands of the over-55s.
There are older homeowners who haven’t yet been switched on to the idea of unlocking their housing wealth.
Challenge retirement perceptions
I think there are two core reasons for this.
First, we must do more to challenge the perceptions about retirement.
The way we reach out to our customers and talk about retirement lending needs to recognise how different each experience of later life can be for every customer.
Whether it’s by phone, face to face or even through our advertising, our market needs to recognise the facts of modern retirement.
Research we conducted found there is a group of homeowners who want to use their housing equity in later life, but don’t want to access that wealth in large chunks.
They want to unlock equity as a regular income alongside annuities, investments and their state entitlements, as part of a tailored retirement plan to help them maintain their standard of living.
Improve distribution support
Second, it remains about distribution.
I believe there are thousands of potential customers who either haven’t heard about lifetime mortgages, or who continue to base their views about equity release on the market of the past.
The challenge over the next year will therefore be to boost distribution.
That means supporting more mortgage advisers to enter this growing market, with education, tools and a helping hand to encourage them to talk to their clients about later life borrowing.
Retirement lending has the potential to be a much larger market in the future.
But to maximise this opportunity, we all need to work together on supporting more mortgage intermediaries to raise awareness with their clients about lifetime mortgages, RIO and other retirement lending options.
L&G Home Finance offers income lifetime mortgage to full market
The launch comes after a pilot last year and will be supported by a television advertising campaign.
The loan is secured against the customer’s home and pays out a regular monthly income – instead of a one-off lump sum or drawdowns.
Income from the mortgage is designed to help people maintain their standard of living in later life and make the most of their active retirement years.
Interest rates are fixed for the life of the loan, with payouts of at least £200 a month over a fixed term of 10, 15, 20 or 25 years.
The TV ad airs for the first time today and aims to challenge the traditional view of retirement by showing how lifetime mortgages can help people to enjoy a more colourful life after work.
A series of four quick scenes, from spa breaks to modest home improvements, are designed to show how the product can enhance life for retirees.
Steve Ellis, chief executive of Legal & General Home Finance (pictured), said: “There’s no one-size-fits-all solution for later life, so whether it’s enabling our customers to make monthly interest repayments or to use their housing wealth to enjoy life’s little luxuries, we’re there to help them have a more colourful retirement.”
Legal & General Home Finance hits £3bn total lending milestone
This achievement comes on the back of results in the first six months of 2018 which showed lifetime mortgage advances up 23% on 2017 at £521m and a market share of 28%.
This growth means that Legal and General Home Finance is now responsible for one in three new lifetime mortgage originations in the UK.
Over 2018 Legal and General Home Finance has brought to the market a series of key product launches.
These include the Optional Payment Lifetime Mortgage (OPLM) which enables borrowers to make monthly interest payments, and the Income Lifetime Mortgage, giving customers the ability to use their housing wealth to provide a regular monthly income.
Additionally, the lender has also sought to assist UK’s interest-only customers by securing new agreements this year with Virgin Money and NatWest – following earlier tie-ups with Santander and The Co-Operative Bank.
Steve Ellis, CEO of Legal and General Home Finance (pictured), said that he expects customer activity to continue to be strong for the rest of the year.
“Brexit uncertainty, a muted housing market and the relatively fragile nature of the consumer economy will be hurdles we all need to overcome, but for this market to really reach its full potential we must strive to grow distribution.
“The fundamentals of demand for what we do are strong but brokers need to ensure that they have a holistic later life lending offering, and feel confident having these conversations with clients.
“It is our mission to normalise later life lending and support retirees across the UK to enjoy their best retirement. If we can double the number of advisers talking to their clients about lifetime mortgages, then we really will be well on the way to reaching the goal of making retirement lending mainstream.”
NatWest to offer L&G lifetime mortgages to interest-only customers
NatWest and other Royal Bank of Scotland customers who may benefit will be offered the opportunity to speak with The Retirement Lending Advisers (TRLA) for advice on whether a lifetime mortgage would be suitable for them.
L&G Home Finance already has similar deals in place with Virgin Money, Santander and The Co-operative Bank.
TRLA is part of Key Retirement Solutions only advises on Legal & General’s lifetime mortgages.
Option for interest-only borrowers
Legal & General Home Finance CEO Steve Ellis (pictured) said: “We’re delighted to be collaborating with NatWest, who also recognise the positive role lifetime mortgages can play, and we look forward to working closely with the bank to provide another option for these interest-only borrowers.”
He added: “We are committed to raising awareness about the transformative impact housing wealth could have to help these borrowers, enabling them to pay off their mortgage debt and enjoy the retirement they’ve always wanted, while remaining in the home they love.”
NatWest managing director of home buying and ownership Ian McLaughlin said it was an important addition to how the lender was helping customers find a solution to best suit their circumstances.
He added: “We always work hard to support any of our interest-only mortgage customers who are reaching the end of their loan term but don’t have a repayment method in place.”
Bank of Mum and Dad will continue to play vital role for first-time buyers – L&G
Family support now accounts for one out of every four UK housing market transactions.
It has become a fundamental part of the way our housing market functions and those hopeful first-time buyers who do not have help can find it significantly harder to get on the ladder.
Demand-side government schemes such as Help to Buy have tried to make mortgages more accessible for first-time buyers, but a lack of appropriate, affordable housing has meant transactions have hit some of their lowest levels in recent years.
Many of those transactions which are occurring are being underpinned by support from family.
But if parents and grandparents are helping so many of these buyers to get onto the property ladder – at what cost is that support being provided?
Feeling the pinch
It can be tough for many families, as our research found nearly one in five over-55s suffering financially as a direct result of helping family members onto the housing ladder.
As a result a fifth of parents and grandparents aged over 55 are accepting a lower standard of living in order to help their loved ones buy a home.
Thousands have either cashed in their pension pots or have used funding from annuities to help a family member buy a property.
Worryingly, one in 10 say they feel less financially secure as a result of tapping their retirement funds.
Is building more homes the answer?
Increasing the supply of housing would definitely help matters, since the gap between supply and demand is still driving house prices upwards, particularly in property hotspots.
However, 30 years of underinvestment means the UK is suffering from poor productivity, low real wage growth and several market failures – affordable housing being one of them.
With 1.3 million households currently on a waiting list, we will struggle to rapidly address the supply side of the housing crisis.
In any case, building more houses won’t feed through quickly enough to ease the pressure on family support in the immediate future.
So, where do we go from here?
Family is a vital funding source for the market and it will to continue to play a pivotal role in assisting first-time buyers on to and up the property ladder.
What then are the best options for homeowning parents looking to support their family by using their pool of assets, including property wealth?
Retirement lending is an option to consider.
Our research found that nearly 14% of the deposits provided by a family member were partly or wholly supported by equity release – nearly double the number who used annuities and over twice as many as those relying on taking out a loan.
Using housing equity to support children or grandchildren can be an appealing solution for many older homeowners, with this wealth acting as an anchor to support multiple properties and families.
L&G Home Finance launches lifetime mortgage that pays monthly income
The product will be available to people aged 55 and over with a minimum property value of £100,000.
It is aimed at supporting consumers who prefer a fixed monthly income to a lump sum, or who have not been able to save as much into their pension as they would have liked.
Like Legal and General’s flexible lifetime mortgage range, interest on the mortgage will roll up over the life of the loan. The loan and interest will be repaid from the sale of their property upon the last surviving borrower’s death or a move into long-term care.
However, with an income lifetime mortgage, the effect of compound interest is reduced as funds are released in monthly amounts, rather than lump sums.
Customers will be offered an interest rate that is fixed for life at the outset, while the monthly income from the mortgage will run for an agreed term of 10,15, 20 or 25 years and cannot be extended.
At the end of the fixed term, the monthly income will stop and interest will continue to roll up until the mortgage is repaid. Consumers can choose to stop this income at any point, but once stopped the income cannot be restarted.
Steve Ellis, CEO at Legal and General Home Finance (pictured), said: “We know how useful that little bit of extra income could be for so many people to keep them doing the things they love.
“Our income solution is a new option for these consumers, giving them the chance to enjoy the benefits of their housing wealth with a fixed interest rate for life, but with the security of a regular monthly income for up to 25 years.
“There is a bright future ahead for retirement lending and we want to see more people benefit from the positive role their homes can play in later life.”
Steve Ellis to speak on ‘reimagining retirement’ at the Later Life Lending Event 2018
This is the theme for Legal and General Home Finance managing director Steve Ellis’s session at the Later Life Lending Event 2018, which will be taking place on 22 November at the Royal Garden Hotel in Kensington.
The event is a forum bringing together the key providers of later life lending solutions, including high street banks, building societies, specialist equity release providers, and advisers – including those already offering advice in the sector and those keen to get involved.
Other speakers include Jaap Van Raak, managing director of Fortrum BV Jaap Van Raak, Richard Rowntree, managing director of UK mortgages at the Bank of Ireland, as well as Baroness Ros Altmann, former pensions minister and older people’s champion at CBE.
All the participants will be joining discussions looking at the demands and requirements of the new generations.
Please click here for more information and keep yourself updated on Twitter following the hashtag #LLLE2018.
Exclusive: Legal and General to launch RIO and encourage mainstream broker interest
The lender will be launching a retirement interest-only (RIO) product next year and is aiming to move its lifetime proposition into the mainstream space.
Speaking to Mortgage Solutions, L&G Home Finance head of mortgage broker sales Marie Catch said the lender was making a big push to interact more with brokers.
“We are planning fundamentally to bring the L&G brand into the residential space,” she said.
“We’ll be working to get brokers to think about the whole later-life lending space.
“They have to be aware clients are going through these whole mortgage transitions generally and they have a duty of care to support customers through whatever life experiences come,” she added.
Hand-holding through exams
Catch will spearhead the move which will launch with an engagement programme helping brokers to understand the growing later-life lending sector and even support their exams to advise on equity release.
As part of these demands she will be building a team to help her deliver this strategy, with new hires in the process of being made.
“We’re going to become more proactive and hands on,” she said.
“We’ll be there to hand hold brokers through qualifications, support how they give advice in the market and getting leads to build their business.
“All these difficult actions that will help them to get to grips with the market and make the transition,” she added.
L&G Home Finance managing director Steve Ellis (pictured) said the retirement interest-only product launch would be a key part of this growth ambition.
“We intend to launch a RIO product next year,” he said.
“It fits with our business and fits with what customers need.”
Ellis suggested there will eventually be two or three versions of RIO products available across the market as other lenders enter. “It will be part of the mainstream,” he added.
The lender is also planning to make later-life lending and its proposition more widely recognised and used by residential brokers who may not typically work with older borrowers.
This will include expanding its distribution
At present L&G Home Finance’s later-life products are available through sourcing system Twenty7Tec, but Ellis hinted that adding networks, clubs and other sourcing systems “could be an answer” to its push into the mainstream.
The equity release market has grown significantly over the last three years, with Ellis predicting it could reach £4.5bn this year and that “there is no reason it could not eventually reach 10% of the residential mortgage market”.
However, one of the barriers to the market’s growth is the regulatory landscape which sees brokers permitted to advise when they have completed the dedicated qualification.
Ellis noted the Financial Conduct Authority (FCA) has shown an open-minded approach with its re-categorisation of retirement interest-only and the lender would like to see further work in this area, suggesting there should be some recognition of the lifetime market on the standard advice exam.
“The regulator demonstrated this year that it is prepared to be pro-active and make changes to the regulations that make sense,” Ellis said.
“RIO creates the opportunity to revisit regulation. A lifetime mortgage is a complicated product and the exam in place makes a great deal of sense.
“Signposting in the general exams is a good idea also and to question about how clients would like to use their housing wealth is another,” he added.
One of the biggest issues to hit the equity release market over the last year has been the Prudential Regulation Authority’s (PRA) latest demands on lenders’ capital requirements.
This has led some lenders to suggest profits may take a hit, but Ellis is satisfied that L&G will not be affected.
“The PRA requirements will have very little impact on us,” he said.
“We have taken a prudent pricing approach and have had some sense about where we thought regulator might go – so it certainly doesn’t change our ambition or approach to the market.”
And as for the rest of the market, Ellis admitted there may be concerns for some lenders, but this should not dent the market as a whole.
“If lenders have large back books of business it could have a significant impact on them, but we have only been in business for a couple of years,” he said.
“There is still a real customer need for these products in a market that has been under served and is on the verge of a breakthrough.
“Even if has impact on some lenders, in this market there’s no doubt it will remain competitive,” he added.
No negative equity guarantees
Related to this was the publication of a paper from the Adam Smith Institute earlier this summer which claimed lenders were under-valuing the risks on no negative equity guarantees (NEEGs).
The fears have been largely down played by the market and regulators, with many of the assumptions made in the paper focusing on the most severe worst-case scenarios.
However, Ellis was disappointed at the paper and authors.
“I get a bit cross when these things happen as we have got a great product now and yet we have still this stuff chipping away at consumers’ trust,” he said.
“We work really hard with regulators to ensure that our pricing approach in respect of NEEGs has no more impact than has been considered already.
“And around the industry there are a lot of experienced actuaries in marquee companies that spend a lot of time thinking about these risks. So I do feel very comfortable with the situation,” he added.
Steve Ellis among the speakers at the Later Life Lending Event 2018
Steve Ellis, managing director of Legal and General Home Finance, is one of the speakers who will be hosting the event.
Other speakers are Jaap Van Raak, managing director of Fortrum BV, UK mortgages managing director of the Bank of Ireland Richard Rowntree and David Sinclair, director of the International Longevity Centre.
The half day event brings together the key providers of later life lending solutions, such as high street banks, building societies, specialist equity release providers and others.
Further, it is also open to the advisers who already deliver existing solutions to older borrowers, and those who are interested in getting involved in this burgeoning sector.
More information on the event.