which is all about repaying mortgages. The whole UK psyche is repay, repay, repay so you’re debt free when you retire. That’s learned behaviour over 35 years of working. And then we come along at retirement and say: borrow some money? That’s the illogicality of it and it’s that we’re working against. SL: You’re right. So let’s change it away from borrowing money to being a retirement solution. 600,000 people reached retirement last year and this year it should hit 800,000. It’s going to rise every year for the next 20 years.
last month lord Warner said pensioners might have to consider unlocking capital in their homes as a Way to pay for care – does this bode Well for the equity release market?
engaging with CFEB. We sometimes don’t give ourselves enough credit for the good things we have managed to achieve as an industry.
What can the industry do noW that Will start to change the status quo in the market? JK: Providers need to step up and put their hands in their pockets to get this message out to consumers. Consumers need to be educated and that costs money. DM: It comes back to promoting that gadget of Julian’s. It’s not just about education but about awareness. PW: We have to remember though that we’re dealing with deep-rooted cultural change here. It’s highly emotional for the customer – my home is my castle. RS: The industry is also working against a tide here because we have a regulator
DM: I think we’re on the cusp of the government seriously looking at equity release now. As an industry we have to think about how we can take advantage of that. AR: That’s where we as a trade association are ideally placed and I do think the government has a much improved understanding and acceptance of the role that equity release has to play. It’s really climbing up the political agenda. The problem is the government doesn’t think the products are quite there yet. We need to engage more with
government on how to develop equity release in a way that fits consumer need to ensure it remains on the agenda in a way that can be used. But it’s a good thing that government is now more willing to look in more detail at this industry and find out about the product and where it can fit. That’s encouraging. VO: I think we need greater clarity about what care costs are and the government could help that. From an adviser perspective the first thing you need to know is how much money is needed by a client and it’s not that easy to get that information. One of the reasons advisers perhaps struggle is they haven’t got half
the story. PW: I have a real fear that if we get excited about the government endorsing equity release for funding long term care we will become more demonised because people still see it as using their house to pay for their care. DM: I think that’s the biggest issue. People don’t want to use their house to pay for care. VO: I think the type of care is also an issue. My late neighbour had a home reversion and she lived in the lap of luxury. The local delicatessen brought her lunch every day, the local carer turned up in an Audi – it was a wonderful domiciliary care situation as a result of equity release. I think people are happy for equity release to pay for their care if it’s the right sort of care.
instead of selling equity release, should advisers be selling a Way of life? AR: A more coherent approach to telling consumers what equity release can do for them is needed from the industry. There is a big piece about consumer education and Julian’s point about marketing really rings true but we’re in a situation where we’re trying to market something with one hand tied behind our backs because the regulator is breathing down our necks. We need to work on changing the perception of equity release as a toxic product. Consumers need to accept it as part of retirement planning and IFAs need to start thinking about it as part of their fact find. It’s inextricably linked. SW: People don’t buy needs they buy wants. They don’t need equity release. They want the new conservatory, the care in their own home not in the dusty old care home down the road. That’s what we need to communicate to people and that’s possibly where we sometimes get muddled up. We need to get people talking more generically about wants. People over the age of 65 need equity release but we have to get them to want equity release. n
mortgage introducer MARCH 2011 41
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