Media and Public Affairs update

Public Affairs

Consultations

The Council has continued to respond to consultations from the FCA and others on behalf of members. Recent and upcoming consultation responses include:

MS16/2 Mortgages Market Study

The Council was supportive of the FCA’s position that overall the mortgage market is working well. However, we made the case that a wider debate is needed to ensure that there is appropriate advice given across all asset classes. The Council outlined that the focus on cost (i.e. cheap is good) and eligibility should not always be prioritised for consumers at the expense of other important features such as suitability when consumers’ makes a choice about the product they use.

Fairness of variation terms in financial services consumer contracts

The Council highlighted standards and principles required by members to ensure that consumers are informed as well as protected. These include the no negative equity guarantee, the right to remain in the property for life and the right for tenants to move to a suitable alternative property with a guarantee of no rate rise.

The Council also agreed that being able to use a variation term in a contract “for any other reason” is not legitimate and should be discouraged. It should be made clear in any contract what reasons legitimise the use of variation terms to prevent misuse for company benefit at the detriment of the consumer.

Select Committee on Intergenerational Fairness and Provision

A new select committee has been formed in parliament to look at intergenerational fairness, identify what problems exist and how they might be solved. The Council responded highlighting that rising house prices and wage stagnation in recent years have made it increasingly difficult for younger people to get onto the housing ladder. The Council outlined how the growing equity release market and increasingly diverse range of products available is part of the solution, helping those over the age of 55 to pass down wealth to assist their children or grandchildren whilst avoiding the need to sell the family home or downsize.

FCA Discussion Paper on a Duty of Care

The FCA is keen to determine the best way to combat concern over regulatory gaps that lead to consumer detriment. The FCA has published the discussion paper to better understand whether there is a gap in our regulatory and legal framework, or the way it is applied in practice, that could be addressed by introducing a New Duty of Care.

The Council has been receiving feedback from members relating to the discussion paper to inform the Council’s response via the consultation portal on the Council’s website. If members have any further feedback, please email [email protected].

Adam Smith Institute report discussed in parliament

Following a question raised by Lord Sharkey in the House of Lords asking the Government about its assessment of the Adam Smith Institute report Asleep at the Wheel: The Prudential Regulation Authority and the Equity Release Sector the Council engaged with and briefed parliamentary allies on the report. The Council supplied Baroness Altman with figures which she used in the Chamber as well as naming the Council, highlighting that even in the event of a sharp decline in house prices, the conventional mortgage market would be far more at risk than the equity release market. Specifically, Baroness Altman said “most equity release loans are only about 30% loan to value… even if house prices were to decline by 30% or more, the problems in the conventional mortgage market would be far greater than those in the equity release market”.

The Council also briefed the Minister of State for the Department of International Development, Lord Bates, on the role of the Council and he highlighted in the chamber that “equity release offers an effective way for home owners to enhance their standard of living in later life”. Lord Bates also highlighted the Council’s no negative equity guarantee and how it “is very important to lots of consumers, because they do not want to leave their families with the potential liability” of an equity release loan and that this “is a key part of the offer”. Given the support offered by Lord Bates, the Council is pursuing further conversations with him.

Media and PR

Proactive media engagement

• The quantity and quality of coverage continues to follow an upwards trend. From July to September 2018, The Council was mentioned in 313 articles, up 42% year-on-year. The 58 pieces of national coverage in Q3 2018, was also up 42% compared with the same period in 2017.

• The Council’s Q2 2018 lending figures were issued in July. The approaching milestone of £1bn of lending in a single quarter was highlighted, alongside messages of ‘steady growth’ and the importance of the ‘social utility of housing wealth’. The figures have been covered over 60 times across key national, consumer, regional and trade publications.

• The Council’s Autumn 2018 Market Report was launched to media in September. It highlighted how the growth of the market has been driven by innovation across the later life lending market, as the number of product options available has more than doubled in two years. The report has been covered over 25 times so far, with positive messaging around consumer choice and competition coming through.

• The ITV Tonight programme on debt aired in August. It featured a positive interview with David Burrowes and a case study organised via Key. The programme was well-received in the industry. It looked at how equity release can help to alleviate debt in later life and showed a balanced perspective of equity release.

• The Council’s media briefing programme continued with meetings with Joanne Atkin, Mortgage Finance Gazette and Kate Saines, What Mortgage – resulting in industry- and consumer-facing by-line article opportunities. Briefings are also being confirmed with Sarah O’Grady, Daily Express, Will Kirkman, ThisisMoney, James Coney, The Sunday Times, and Rachel Addison / Carmen Reichman, FT Adviser, among others. 

• The Council issued a comment on the Government backing the Housing, Communities and Local Government Select Committee recommendation that the Single Financial Guidance Body should signpost the elderly to home finance options, including equity release. The comment received widespread trade coverage, such as in Mortgage Strategy.

• David Burrowes’ by-line for Retirement Planner on how equity release can fund social care was published as was Jim Boyd’s Mortgage Finance Gazette ‘speaker’s corner’ by-line, which was on the topic of greater education in equity release.

• In response to Moneyfacts research on equity release and advice, IP spoke with journalists who covered the story to clarify misleading aspects of the research. This prompted Kate Saines, from What Mortgage to write an article in response. It included The Council’s commentary on robust standards in the equity release advice process.

• Over the quarter there were numerous journalist comment enquiries including: Ali Hussain, The Sunday Times on the baby boomer generation helping their children buy homes using equity release, Adam Williams, Daily Telegraph in response to the reader’s question ‘What happens if an equity release provider goes bust?, Adam Williams, Daily Telegraph on the extent to which providers’ ensure that customers are getting the cheapest deal, Samantha Partington, Daily Mailon early repayment charges and considerations for consumers, Rachel Addison, FT Adviser on intermediated vs. direct/single-tie sales of equity release mortgages and Emma Powell, Investors Chronicle on the Adam Smith Institute report and PRA consultation.

Issues management 

• Significant time was invested in managing media interest around the Prudential Regulation Authority’s consultation on Solvency II and equity release mortgages, which was announced in July and closed in September. This consultation garnered initial interest from the Daily Telegraph, Financial Times, The Times and Mortgage Strategy. The Council formulated a holding statement in response, in consultation with the SII Working Group and ABI, and issued it on a reactive basis. A briefing note was also drafted for members of the House of Lords on the ASI report and Solvency II ahead of oral question being raised in the house.

• Consulted on and managed the communications surrounding the BBC Radio 4 equity release programme and launch of Adam Smith Institute (ASI) report.

• The Council also drafted an accompanying factsheet to help clearly distinguish between the features of RIO mortgages and lifetime mortgages, to be used as a reference point as more RIO products come to market, with key stakeholders and media.