MortgagesOct 10 2013

Advisers slam Key Retirement Solutions equity release ad

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Advisers have criticised an equity release advertisement by Key Retirement Solutions that appeared in The Telegraph newspaper as being “completely against the spirit of equity release”.

The advert, which equity release IFA John Miller said appears in the 28 September edition of the paper, encourages over-55s to consider it as a way of funding a Christmas spending spree while avoiding large credit card bills.

The Telegraph advert says: “Many over 55s will be hearing alarm bells as they consider paying for this year’s presents with next year’s money.

“Christmas is traditionally a time of hospitality and generosity. It’s all about spending time with family and friends and of course, spending lots of money.

“What with spoiling the grandchildren, decorating the tree, eating and drinking, it is no wonder many people struggle to cover the cost.

“If you’re a homeowner aged over 55 and you can’t afford to finance this year’s festivities, there may be another way.”

In a letter to the paper, which Mr Miller also sent to FTAdviser sister publication Financial Adviser, he said: “Surely equity release is supposed to be the last resort option for hard pressed pensioners after a consideration of alternatives including trading down, grants, use of savings etc?

“To encourage equity release on frivolous reasons... is more about the company grabbing market share than anything else.

“I am sure the grandchildren would appreciate their inheritance from their grandparents at a later date rather than some long-forgotten Christmas presents.”

Alan Lakey, partner at Highclere Financial Services, said: “I do a lot of equity release and you have got to be so careful. I would never approach it in that way without a shadow of a doubt.

“You have got to find out first of all if there is a better solution.”

Responding to the letter in Financial Adviser, Dean Mirfin, group director of Key Retirement Solutions, said: “The principle behind this is to allow readers to consider the different options available to them to make purchases that they plan to make and to consider the best way for them to fund this.

“The advice process we follow is extremely robust and before anyone releases any equity all alternatives are fully explored.

“We do not dictate to anyone how equity release must be used, but it is a fact that grandparents do want to gift to their children and grandchildren and many do not have the luxury of having high enough levels of savings.”

Simon Chalk, technical manager of equity release for Age Partnership, had more sympathy for Key Retirement Solutions’ approach.

Mr Chalk argued that people might otherwise take on debt they cannot afford.

He said: “In a way it’s a very sad reflection of society that people spend what they don’t have to buy presents.

“I’m afraid what this is trying to do is anticipate the trend and get in before it.

“It’s the reality I’m afraid.”

He added that the most popular reason for taking equity release is in fact the repayment of debt.