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MS One to One with Aviva’s Clive Bolton

  • 17/01/2012
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MS One to One with Aviva’s Clive Bolton
Aviva's at retirement director, Clive Bolton (pictured), speaks to features editor Kay McLellan about the provider’s decision to exit the home reversion sector, future developments and whether equity release has reached a tipping point in 2012.

KM: Aviva has announced it is to pull out of the home reversion market in February this year, saying most of your customers opt for lifetime mortgages. Do you think home reversion is still relevant to the market?


CB: Aviva’s decision to pull out of home reversion is not really a comment on the sector itself. It is a viable market that has a lot to offer customers and we don’t want our actions interpreted as a negative against the sector.

The simple fact is that home reversion is a very small percentage of our sales. Both lifetime mortgages and home reversion plans achieve very similar outcomes for the customer, but it takes a different level of expertise to do home reversion and that is why we partnered with Grainger [which has funded Aviva’s home reversion plans since April 2005].

How you attack the market depends on the expertise you have and we didn’t have it in home reversion. It’s why we have decided to concentrate on lifetime mortgages.


How do you see the equity release market developing over the coming year?

We have seen an increasing number of people in their 60s coming in to consolidate debt. Quite understandably, once people are in their 60s and especially as their earnings go down, accessing loans becomes quite tough. We see it as an area where products like equity release could play a part.

A lot of equity release pricing will also change according to the yields available in the credit market. Yields are going down, which is good news for equity release and we will see more developments, like plans taking into account medical conditions.


Do you think that equity release products will become increasingly bespoke for people’s individual circumstances?

I think equity release will become more bespoke. It may not actually be in the product arena, but in the service area and the interaction that we have with customers.

They have to have a lot more advice and we need to make sure it’s the right product for them for life, as they can’t chop and change unless they go into long-term care.

It’s much more of a commitment on both sides and we are keen for customers to understand that.

The number of people hitting retirement age is set to reach a peak this year. Is this the turning point for the market?


I think it will be a slow burn. Not everyone is going to retire and get an equity release plan. It will be spread over the next decade, as retirement has been deferred by economic conditions and people choosing to work longer.

However, the outlook for the product is very encouraging. With things like the Dilnot report [into funding long-term care] and through our own research, we can see the attitudes to using a home as an asset is beginning to shift as the economic reality sets in and people realise they have underfunded their retirement.

Do you expect to see further new providers coming into equity release this year?


We have seen several new entrants coming in compared to the low point of 2009. The market is in a much healthier state than it has been and I think that will continue. From Aviva’s point of view, we would encourage a healthy market with more players.

SHIP is due to announce the framework of its restructure to include all equity release firms as members. Do you believe the move will have a positive impact?


We can make a bigger impact in shaping the industry if we are one voice. We fully support SHIP’s move and a lot of work is going on to make it a success. We see this as a must to have effective debates with policymakers and a key element in growing the market.

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