'Future of equity release looks bright'

In fact, it has very much charted the same course as my career as a journalist over the same period of time: suspect to begin with, much improved, but still could do better. 

Equity release was one of the first areas of the personal finance world that floated my boat when I joined a national newspaper in 1990; I had previously worked for the much missed Money Management magazine (part of a suite of superb FT publications) where I tended to specialise in investments.

Although I respected the doyen of equity release at the time, the kindly Cecil Hinton, and even spent a happy day meeting some of his clients, I was soon reporting on the muck that was investment-bond-linked equity release.

Equity release is far more consumer orientated than it has ever been.

A toxic financial product that caused nothing but misery as the investments fell in value and the equity loans mushroomed to the size of nuclear clouds. Guardian Royal Exchange, Fisher Prew-Smith, West Brom Building Society – I spilt journalistic blood with them all. 

Today, equity release is a product far more consumer orientated than it has ever been.

Although rising interest rates and wobbly house prices do not provide an ideal backdrop, equity release does give an option for many homeowners to tap into the equity locked up in their castles, bungalows and four-bedroom detached houses.

An option that some retired people may now find irresistible, given the current cost of living crisis and inflation taking crocodile-size bites out of their household finances.

My mum and dad (who is sadly no longer with us) turned to equity release when they ended up cash poor and equity rich in retirement. It has allowed mum, now in her late 80s, to stay in the home she has no desire leaving (she’s both stubborn and mightily proud of her home) and as a family we have accepted her right to do so. 

Of course, the plan that my parents bought bears little resemblance to those available today. Though I have looked to see if the loan can be switched, onerous (and unintelligible) early redemption penalties make it a no-go.

I got the sense that the mood music across the sector – be it from advisers or providers – was rather good.

It also does not have the bells and whistles that modern day equity release plans have, and which maybe I and other family members would have used to keep the outstanding debt under control.

For example, it does not provide the ability to pay some of the interest every month, rather than have it all roll up into the loan, snowballing debt upon debt.

Nor does it allow irregular repayments of debt or the ring-fencing of a slice of the home value’s for inheritance purposes (some of my siblings would have liked that).

Yet, it is the now that is important. And as a result of assured leadership from the Equity Release Council, standards across the equity release market are rising, not falling.

Last month, I attended the ERC’s summit at Church House in the heart of London’s Westminster, a stone’s throw from the Houses of Parliament.

Although I was only there for a couple of hours, I got the sense that the mood music across the sector – be it from advisers or providers – was rather good. More Abba’s "Waterloo" than Barber’s "Adagio For Strings".

Jim Boyd, chief executive of the ERC, is doing a pretty good job in cajoling the industry to become more consumer friendly.

I like the pressure that he and the council are applying on providers to standardise the way they disclose their charges in plan literature, thereby enabling potential buyers to compare and contrast different plans. Greater transparency is a force for good.

Equity release is an area of the personal finance world where quality, face-to-face financial advice is worth its weight in gold.

With an eye on new consumer duty requirements being imposed across the financial services industry by the Financial Conduct Authority, it is also good that the council wants providers to ensure that customers and family members are given key information at key points in the equity release journey.

For example, when a loved one dies, leaving the surviving partner with a plan that maybe they don’t fully understand – and also when the plan ceases and family members have to grapple with a plan they never fully grasped.

Equity release is not for everyone. There are alternative solutions, none more so than downsizing. Yet it is a market that is not going away.

What I will say quite emphatically is that equity release is an area of the personal finance world where quality, face-to-face financial advice is worth its weight in gold.

Some of the advisers I either met, or took questions from, at the summit oozed trust. It was a joy to smell it.

The future for equity release is a hell of a lot brighter than it was 35 years ago.

Jeff Prestridge is group wealth & personal finance editor of DMGT