Equity Release Council parliamentary briefing event

About the event 

Julian Knight MP hosted a parliamentary briefing event to launch the Equity Release Council’s white paper, Equity release rebooted: the future of housing equity as retirement income, co-authored by Rob Thomas, Director of Research at Instinctif Partners and Dr Louise Overton, Lecturer in Social Policy at the University of Birmingham.

The event included speeches from Dr Louise Overton, Nigel Waterson, Chairman of the Equity Release Council; and Michelle Cracknell, Chief Executive of The Pensions Advisory Service (TPAS).  Rob Thomas joined the panellists to take part in the Q&A session chaired by Julian Knight.

Overview of speeches

Julian Knight MP introduced the event and speakers, highlighting his own background in financial policy and journalism, and expressed his long-held belief in the value of equity release.

Dr Louise Overton then spoke on the progress and challenges in meeting consumer demand for equity release. She outlined the research on consumer experience and perceptions of equity release which underpinned her section of the white paper, including a fear of ‘ending up with nothing’ which is present among many less well-off consumers. Dr Overton expressed her view that further effort needs to be made to ‘future-proof’ equity release products to ensure they are suitable in the long-term if people’s circumstances change. She also discussed the belief of many firms that regulatory requirements restrict their ability to provide simple information about equity release.

Nigel Waterson commented on the opportune timing of the white paper, coming just before the general election, and made clear that its intent was to influence the next administration’s thinking on equity release. Waterson stated that there was a “new confidence” in the equity release sector and that the requirements for financial advice and solicitor agreement on every equity release product were above the standards for other financial products.

Waterson highlighted that equity release can help solve many of the challenges of an ageing population without the need to access additional government funding and urged the government to go further in supporting equity release, by having a dedicated policy team in a central government department, preferably HM Treasury, to ensure that equity release is on the agenda across Whitehall.

Michelle Cracknell covered the value of the pension freedoms in increasing awareness of pensions, highlighting that 72% of 22-60 year olds were aware they could take their pension pot as a lump sum. However, she said that because consumers were not always fully considering the amount needed for their long-term retirement income, it was inevitable that the worlds of pensions and equity release would be coming closer together.

Ms Cracknell commented on the ’branding’ of property and pensions, with many consumers viewing property as a better investment for retirement than pensions, and questioned why the industry has got this “so wrong”. Cracknell said that as well as some of the ‘branding’ issues around equity release, cultural perceptions around retirement income and inheritance persisted which will take time to overcome.

Questions from audience members 

• Julian Knight challenged The Council on why it should have a team in Government to “do your job for you”. Nigel Waterson clarified that the Government shouldn’t promote products, but should take a coordinated approach to equity release policy to unlock the benefits available.

• Geoff Filkin, Chair of the Centre for Ageing Better, asked what The Council had done to address the problems of poorer older owner occupiers, often with little equity, and who lack income to carry out needed repairs and adaptations to their homes. Dr Louise Overton said she would like to see the industry devote more time to this issue.

• Stephen Lowe, Group Communications Director for Just Retirement Partnership, commented that there is currently work being done with the Cabinet Office about using housing equity to pay for care.

• Terri-Ann Humphreys, Development Director at the Society of Later Life Advisers, asked how ‘soft skills’ can be taught to financial advisers to improve the quality of advice on equity release. Dr Overton suggested that a regulatory or industry steer is needed, while Mr Waterson said that the existing checklist for advisers encourages people to discuss their product with their families, but that advisers cannot mandate this.

• Peter Boyd, Director of Boyd Legal, enquired whether the Council had considered the role of lawyers in equity release. Mr Waterson noted there were huge issues facing the sector on mental capacity, and suggested that lawyers had a role in certifying capacity.