The Equity Release Council (The Council) has published a White Paper outlining key recommendations for government to help equity release meet the challenges of an ageing society, and calling on HM Treasury to take a lead on coordinating relevant policy to benefit consumers.
The paper – Unlocking the potential: the future of equity release – was launched at a Westminster briefing yesterday, attended by representatives from industry and Parliament. It examines how people’s housing wealth can provide them with an additional source of finance in later life and help Government to better support the UK’s ageing population.
The Council proposes that HM Treasury’s oversight of other relevant departments – including the Department for Work and Pensions, the Department for Communities and Local Government and the Department of Health – combined with its responsibility for financial services, makes it the natural choice to coordinate policy on equity release.
The report also identifies where Government policy could do more to consider equity release as a way of meeting people’s retirement needs, and where regulation is providing direct challenges to the development of the sector. It argues that a cohesive approach across departments is necessary to avoid unforeseen consequences and ensure the maximum benefit for consumers and Government.
The White Paper includes seven specific recommendations, namely that Government should:
- consider the role of equity release as part of its strategy for addressing the challenges of an ageing society, ensuring that people are able to utilise housing wealth to improve their income and wellbeing in retirement where appropriate;
- expand the scope of the Pension Wise service to enable users to understand how accessing housing wealth may provide solutions to satisfy their objectives;
- consider how equity release can be utilised to help people pay for home care – providing financial resources which can help people retain ownership of their home and stay living in it for longer;
- in conjunction with local authorities and other stakeholders, develop clear pathways for local authorities to use to help people who are seeking support on financing care services understand when they should access regulated financial advice and how they should go about doing so;
- develop a range of case studies to illustrate best practice on referral to financial advice on care funding, which would complement the guidance on the implementation of the Care Act;
- use the Financial Advice Market Review as an opportunity to ensure that people nearing retirement are able to access independent financial advice, which allows them to consider the full range of relevant issues – including retirement funding, paying for care, home adaptations and leaving money to children and grandchildren
- ensure the Financial Conduct Authority’s (FCA) review of the equity release market is wide-ranging and considers the impact of the regulatory framework on the equity release market, as well as other potential barriers to increasing the size of the market.
Speaking at yesterday’s launch, Nigel Waterson, Chairman of the Equity Release Council, commented:
“The equity release sector is growing fast, and is likely to become even more popular in the next few years. This growth is driven by a range of factors – so-called “interest only prisoners”, the challenges older customers sometimes face in accessing standard mortgages, and care costs. And many over-55s continue to access their property wealth to improve their homes, help family members or enjoy foreign travel.
“It is therefore all the more important that Government and regulators do more to encourage responsible equity release. We urge the Treasury to become our sponsor across Whitehall. And we are delighted that the Work & Pensions Select Committee have just in the last couple of days endorsed our view that the Pension Wise guidance be extended to cover housing wealth.”
Lord Lipsey, who also spoke at the event, commented:
“The government’s sneaked-out decision to ditch all the key Dilnot reforms has dealt a body blow to many pensioners. In future it is even more important that government tries to get its act together over equity release, so its potential to help people with their incomes in later years can be realised.”
And Heather Wheeler MP, who hosted the event, concluded:
“It was great to host and chair the Equity Release Council’s event at Parliament yesterday. The event was an important opportunity for Parliamentarians and industry to discuss the Council’s new report and the challenges that equity release faces in the future. Releasing equity in one’s home and assets is a fantastic alternative, which many more people are doing, to help pay for later life costs giving people who are 55+ real choice.”
Notes to editors:
For further information, please contact:
- Andy Lane, Victoria Heslop or Sam Fisk at Instinctif Partners, on 020 7427 1400 or email TWC.TheEquityReleaseCouncil@instinctif.com
About The Equity Release Council:
The Equity Release Council is the industry body for the equity release sector. Built on the legacy of SHIP, The Council represents over 400 members; namely, providers, qualified financial advisers, solicitors, surveyors, intermediaries and other industry professionals – each committed to The Council’s Statement of Principles that aims to ensure consumer protections and safeguards. In addition, The Council works to boost consumer knowledge and increase awareness of equity release as a solution to financial challenges facing people over the age of 55 across the UK.