MIp25-26_0210:MI 12 Jan 21/01/2010 15:25 Page 3
Equity release
25
On the
right road
Alison Beeston, compliance & communications
manager at Bridgewater Equity Release, looks at the
journey ahead for those involved in equity release
s we step into 2010 and the snow including Coventry, Newcastle and Saffron type of provider from the equity release sector as
A
drifts it seems apt to reflect on Walden. Last year also saw others such as unsettling but of course this provides an
what has been a rather Northern Rock and Retirement Plus leave the opportunity for those providers who remain and
tumultuous year for both the market – while some of these may be temporary who are committed to the market.
mortgage market in general, but exits their loss meant a fall-off in competition
particularly the equity release and quite obviously a drop in the number of Positives
sector. Back at the tail end of products available to potential equity release Despite these providers pulling out of the sector
2008 it seemed like the worst ravages of the customers. there is still much to be positive about; equity
Credit Crunch and the liquidity crisis had not While the providers listed above were all release is a resilient beast which continues to
been as severely felt by the equity release market relatively small players in the market the biggest punch above its weight and with SHIP, has a
as others, especially compared with sectors such shock to the sector came with the withdrawal of significant trade body championing its use as a
sub-prime and self-certification. A year on and industry heavyweight Prudential. In November means to help many consumers fund their
it’s fair to say that the crisis has left no part of the the Pru informed the market of its intention to retirement needs. That said, with providers
mortgage market unchanged and 2009 certainly stop writing lifetime mortgage business in Q1 leaving we do need to broaden the appeal of
saw a myriad of changes and disruption affecting 2010 suggesting that it could better use the equity release to other financial institutions. To
equity release. upfront capital needed for this type of business this end SHIP ended last year by setting up a
News concerning equity release providers, in other product areas. It also said that when it campaign to show the benefits of the sector to
advisers or trade bodies often dominated the had originally launched its lifetime offering it other financial institutions – it is to be hoped
pages of the trade magazines and it often seems had intended to securitise its mortgage book but that the barriers to entry, particularly for larger
remarkable that a sector which is still relatively clearly this had not been possible because of the players who may be looking for much more
small can command such attention across the inertia in the securitisation market. significant returns, can be overturned.
board. Any review of 2009 must start with the Make no bones about it, this was a major
lifeblood of the sector, the providers who offer upset to the lifetime mortgage sector given that Advisers are crucial 
lifetime mortgage and home reversion products the Pru had around a 12 per cent share in 2009 In delivering an equity release market which can
either direct or through advisers to consumers. and 23 per cent in 2008. While competition is flourish and grow, advisers are crucial. Currently,
This was a year when a number of them decided good in any marketplace, having a brand name advisers account for approximately 75% of all
enough was enough and pulled their product like Prudential which many consumers trust and equity release sales and are therefore at the heart
ranges from the marketplace. respect involved in the equity release market of the sector and still the predominant way
certainly helped boost the visibility of the equity business is conducted rather than consumers
Exits release brand and provided confidence to many going direct to a provider which is excellent
In a short space of time we saw a number of that equity release was a safe product and one news. To this end, advisers have a duty to
building societies exit the equity release sector worth pursuing. Advisers may view losing this provide the most professional service possible
www.mortgageintroducer.com February 2010 Mortgage Introducer
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