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Equity release news
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SHIP takes action
The summer has been an these trends, there are some serious those most in need, as has been SHIP has to evolve too. According
interesting time for SHIP. Following constraints. Indeed market adopted in other countries to Vanessa Owen, LV= head of
Which?’s much publicised equity weaknesses are restricting the The SHIP discussion went down equity release: “The role SHIP has
release mystery shopping exercise sector’s capacity to adapt products, well with the industry. played as a trade association for
which criticised advice given in the advice processes, compliance Commenting on it, Simon Little, regulated equity release providers in
area, it has come out all guns regimes and pricing to fully meet director of Home & Capital, said: the UK over the last 18 years has
blazing. these emerging needs. “The SHIP discussion paper brings been vital, and should not be
Commenting on the Which? SHIP’s debate involved key an issue of critical importance to underestimated. The code it has
research, Andrea Rozario, director stakeholders, such as the the fore: how we face the challenges developed has been central to
general of SHIP, said: “We believe Government, regulators, consumer of Britain’s ageing population and ensuring the protection and peace
that when you look at this piece of organisations and the voluntary meet the cost of retirement. of mind of consumers who have
research, you need to look at what sector, as well as the equity release “It’s clear to all the current pensions purchased SHIP compliant lifetime
has been excluded as well as what industry and wants to look into arrangement is unsustainable. In mortgages and home reversion
has been included. Which? has how the sector can evolve to better under a quarter of a century, a plans.
criticised the process for advice, meet the needs of different types of sharp increase in Britons reaching “However, we believe that if the
but not the actual fundamental customer. retirement age, combined with market is to truly evolve and be in a
outcome of that advice, nor the As part of this discussion, SHIP rising life expectancy, will see the position to tackle the needs of its
products themselves. This is a step is calling for the Government to system overwhelmed and unable to growing diverse customer base,
forward from last year when they launch a formal enquiry into the cope. Inadequate pension provision then SHIP as a body needs to evolve
branded equity release a ‘product of role which equity release could play – not helped by the end of final with it. LV= believes this means
last resort'. in helping to fund today’s and salary pension schemes - will mean extending the protection offered
"But continuous improvement is tomorrow’s retirement funding pensioners either meet the cost of and using the SHIP brand to
needed. Although there are needs. SHIP has identified many retirement on their own or face provide reassurance not just on
estimated to be over 7000 people areas that could evolve to fully meet poverty. The growing number of product features but also enabling
who have taken the specialist equity the needs of all customers wishing older people requiring care means advisers to become SHIP approved
release exams, the fact that Which? to utilise property equity, but the the issue of funding care provision themselves as this would help
has found issues with the processes big question is when, if ever, it is also a key consideration – both reassure consumers that they fully
of some of the 40 advisers reviewed might be prudent to allow that for individuals and the state.” understand the market. The end
shows there is absolutely no room evolution. Key topics for discussion Yet Key Retirement Solutions has benefit would be even greater
for complacency. Advice is a crucial ar called on SHIP to engage more protection for consumers.
step in the equity release process - circle6
e:
The capacity for product directly with consumers in the “
and with each client's needs being providers to innovate and shaping of the future of the equity circle6
What we would like to see is:
The SHIP Code of Practice
highly individual and unique - one improve the flexibility of what is release market in the UK. It believes evolved to allow for greater
that should be closely monitored to offered to customers, both to that whilst SHIP lists a number of flexibility in designing products
ensure consumers are getting the traditional customers for which bodies and organisations with that meet the needs of
best help possible.” strong safeguards are essential whom they want to have discussion
SHIP then launched a discussion and emerging, better off and debate, which include the circle6
consumers.
Any product rating devised to
paper to provoke debate around the customers. Equity release is Government, The Financial Services recognise the information needs
barriers to growth that this market currently regarded as ‘high risk’ Authority, and intermediaries, there of consumers with credit given to
is facing. for both. There is no ability to is no mention of direct discussion those products with clear and
At the heart of the SHIP Paper, reflect degrees of risk appropriate with consumers themselves.
entitled Facing the Future, Dean Mirfin, Key Retirement circle6
easily comprehensible terms.
Security of Tenure to remain
Redefining Equity Release, was new circle6
to different client types
The cost structure of products Solutions group director, said: “It is sacrosanct for ‘Gold’ plated
research which showed that there is relevant for each type of inconceivable that such an
no longer one ‘type’ of equity customer: full guarantees are very important process should exclude circle6
products.
The inclusion of advisory firms
release customer, but many. People, valuable for many customers, but direct consumer research, and we and solicitors practices within
at or after retirement, turning to may be an unnecessary expense urge SHIP to engage with those SHIP and excellence in consumer
equity release products are who matter the most, the customer, protection in these areas to be
becoming more diverse in their circle6
for others.
Whether Government can clarify to help with the shaping of the able to be recognised by carrying
needs and circumstances, and are how benefits eligibility is affected market in the UK. The discussion the SHIP brand.”
putting their property equity to a by different types of equity paper highlights the limited There is no doubt that the
much wider set of uses than before, release and make it clear that the intelligence for the equity release changing pensions landscape in
including funding care, tax and equity released is not subject to market and we believe that some of the UK will mean that more
estate planning, or enhancing their the more meaningful data rests people over the coming years will
lifestyle. circle6
tax
Whether, to increase the safe with today’s and tomorrow’s look to equity release as a viable
Yet SHIP is concerned that while availability of equity release, consumers.” option to support them in their
the current regulated equity release Government could consider any And LV= believes that if the equity retirement. The debate on equity
sector is doing much to respond to element of state support, for release market is to evolve then release continues.
www.mortgageintroducer.com September 2009 Mortgage Introducer
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