As the Council celebrates 30 years of setting standards we caught up with four members who signed up for membership during this landmark period.
Reflecting the sector it is proud to represent, the Council has experienced significant growth in its 30-year history. The organisation was first launched as Safe Home Income Plans (SHIP) in December 1991 and was for providers only. The fact the original product standards those trailblazers set remain largely unchanged to this day is testament to their value and the role they continue to play underpinning the safe growth of our market. Those standards which our members agree to adhere to, compliment and go beyond formal regulation, which the sector has received since 2004.
When SHIP relaunched as the Equity Release Council in 2012 it was an opportunity to embed those standards even further by encouraging membership from all corners of the equity release profession. The call did not go unanswered. By 2019 the Council had signed up its 1,000th member and equity release was on the brink of becoming a £4 billon pound a year industry.
Fast forward to 2022 and the Council represents more than 1,700 equity release professionals at over 700 firms. All are determined to help people who wish to consider the option of equity release whether it is to gift money to loved ones, improve their living standards or just meet day-to-day living expenses. Together we have built an industry despite the challenges from the pandemic in recent years, is on course to tip £6 billion this year and the new members keep coming.
Standard Life Home Finance signed the dotted line in December 2021 before announcing its membership in the New Year. Kay Westgarth, Head of Sales, said: “When we entered the market, we felt it was important to join the Council as we wanted to ensure our customers and the advisers who serve them understood that we were committed to meeting the highest standards in the sector.
“Helping people make the most of their assets and supporting them as they make choices around how they fund later life only makes sense. By working with the Council, we can be at the forefront of developments in this exciting market.”
Maria Richards from law firm Setfords had already been a Council member when she was at a previous firm and advocated for Council membership in her latest role. “The quality mark for our clients was important,” she said. “The stigma against equity release is shifting in the right direction and I can see the rise in applications. However, there are still remnants of the bad reputation from the unregulated providers of years ago. Council membership assists in ensuring clients feel safe and professionals are understood.”
Kay said that being able to communicate with advisers and help to educate them was an advantage of membership. “Equity release can be a great retirement planning solution and not just route of last resort. This is where working with the Council to deliver that message through our own thought-leadership research has been extremely helpful.”
Dan Osman, an adviser from UK moneyman, delivers the kind of holistic advice that firms like Standard Life and the Council itself want to see across the board.
He believes rising interest rates will place an even greater value on the no-negative equity guarantee that comes with products that meet the Council’s all important product standards.
These standards also guarantee customers fixed or capped interest rates, secure tenure for life, the right to move to another property and the right to make penalty free payments. While the last standard on that list was only introduced earlier this year, the others are widely credited with helping to transform the reputation of the sector and support its safe growth. In addition, the Council requires customers to receive independent legal advice and encourages them to include family members in these important discussions.
“Ensuring clients understand the impact of allowing all their equity to erode is far more crucial in ensuring that we are not helping to ‘kick the can’ of the burden of care fees down the road,” Dan said. “Often with younger borrowers, we will arrive at a two, or even three, stage plan with a lifetime mortgage being the end result rather than the initial solution.”
“Where possible we involve family and any other relevant professionals the client is engaged with to make sure that all angles are fully explored. Being part of a multi-disciplinary team is also a key to this approach with the ability to draw on specialists in conventional mortgages, RIOs and the new fixed term interest only over 50 products.”
Anthony Plotnek, director insurance investment, at WTW, is representative of the growing number of professional services providers that have joined the Council.
He said: “We recognise the importance of equity release mortgages, both as part of the suite of later life lending solutions as well as an investment for insurers that can be used to back annuity liabilities. Given our involvement in supporting insurance companies who fund equity release, we wanted to ensure that we were engaging on key topics, leveraging our experience and sharing our views through membership of the Council.”
Anthony said they have been helping firms understand the impact of rebrokering activity when setting prepayment assumptions allowing for the changing interest rate backdrop. They have also advised on new types of flexible equity release product offerings that adapt to customers’ needs. Firms like WTW might be looking at the sector from a different perspective, but they are grappling with the same challenges as those members who are at the coal face.
Anthony said: “We consider that the current economic, political and regulatory environment are drivers of a number of challenges to the equity release market. But with challenges also come a plethora of potential opportunities.”
- The views of contributors are not necessarily shared by the Council.
