Chris Pond is a former pensions minister in a Labour administration and was chair of the Council’s then Standards Board for 12 years. The following is an extract from his keynote speech, which was delivered the morning after the general election was called.
“There is understandable anxiety that statutory regulation of financial services may become more burdensome with a change of administration. I don’t believe that is inevitable but the best way to mitigate any such risk is for us to demonstrate that tougher statutory rules are unnecessary in a sector which already regulates itself.
“Our standards mean that policymakers and regulators will trust the industry to deliver fair customer outcomes. Vitally it also enables consumers to trust that equity release is safe and reliable. Consumer champions like Martin Lewis – with whom I’m privileged to work as a trustee of his Money and Mental Health Policy Institute – insist that if people are considering releasing equity they use an Equity Release Council member firm. So too does the Money and Pensions Service and many financial journalists.
“I was at an event earlier this week with representatives of three financial regulators. One of them, with whom I had worked as Chair of the Lending Standards Board, told me: We have more than enough to do. If you can reassure us that the Council’s members are abiding by voluntary standards that go beyond statutory regulation, we can be less intrusive.
“And we know that the Financial Ombudsman Service looks to see whether advice has followed Council standards when considering complaints. A lot of firms are puzzled as to how they can demonstrate that they comply with the Consumer Duty – a rather nebulous concept. Adherence to voluntary standards is a pretty good starting point.
“The Standards need continually to evolve, especially with the introduction of Consumer Duty and I’m pleased to have passed that baton as Chair of the Standards Committee onto Michelle Highman – who is also the chief executive officer of the Money Charity, of which I was proud to once have been its chair. Michelle will continue to guide the evolution of Standards, supported by expertise from our members and broad member consultation and by the incredibly professional team at the Equity Release Council.
“Why does all this matter? It’s because robust but flexible standards are essential to the growth of the later life lending market. It is thought there is nearly £5.2tn of non-mortgaged equity – half of it owned by owner-occupiers aged 65 plus – according to Savills. Meanwhile, AKG estimate that the later life market represents £153bn. They define this market as standard, RIO or equity release mortgages for borrowers over the age of 55 with terms that extend into or start during retirement.
“If that estimate is correct, we’re reaching less than 2% of that market. If we are to further access this potential market, we need to build trust and confidence, an assurance of good consumer outcomes. If safely released, those savings in people’s homes could help us meet many of the challenges we face as a nation, including enhancing well-being in retirement, driving towards net-zero and meeting some of the costs of long-term care.”