Industry defends equity release from FCA attack

Brokers and industry specialists have leapt to the defence of equity release following a Financial Conduct Authority (FCA) report suggesting the market lacks competition.

Christopher Woolard, director of strategy and competition at the FCA, said in a speech that equity release had been "a dirty word" in the past and suggested this might deter new firms from entering the market and affect consumer willingness to buy.

Jeremy Duncombe, director, Legal & General Mortgage Club, said equity release will soon become an intrinsic part of future financial planning in the UK.

“Those who are asset rich but cash poor will increasingly be looking for new ways to release some of their money as they move into retirement."

But he welcomed any action the regulator can take to stimulate competition and broader participation.

Duncombe said: “For those lenders looking to move into this sector, it is important they have the support and space they need to innovate.

“It is encouraging to see the FCA recognising the changing dynamics of the market, and tackling this challenge head-on.”

Nigel Waterson, chairman of The Equity Release Council, said any lingering poor perceptions of the quality offered by equity release plans were “extremely outdated” and the sector has never been in better shape.

“The FCA is right to identify equity release as a tried and tested yet potentially untapped market in the UK.”

He welcomed the regulator's intention to explore ways that it could help ease the financial constraints on an ageing population.

“Equity release is currently helping record levels of consumers excluded from other avenues of borrowing and we look forward to working closely with the FCA to examine all possible new approaches that could help more people.”

Waterson said equity release has one of the highest levels of consumer protection in financial services.

“This regulation it could be argued, has constrained the sector’s growth by restricting the number of providers choosing to enter it but we believe that consumer protection is at the heart of meeting consumers’ needs.

“However considerable product innovation from the providers means that the choice offered to consumers has never been greater, suiting the needs of a diverse range of people and circumstances.”

Bernie Hickman, managing director of individual retirement at Legal & General, said: "'If we can help more older homeowners to benefit from releasing this wealth, we can improve retirement outcomes, reduce dependency on the State and give a boost to UK plc as some of the £1.3 trillion of housing wealth owned by over-60s is unlocked.”