While equity release offers later life clients the biggest potential to increase assets it is still not part of the mainstream conversation with advisers, says Bruno Meiller, director of products and direct channels at Legal & General Home Finance.
“I believe the [Financial Conduct Authority] is acting correctly when they say they have a specific set of rules for equity release, given what happened in the past and that it is slightly different from a mortgage.
“But by having that differentiating set of regulations and requirements for equity release... that causes a few advisers to shy away from that industry in order to avoid the regulatory risk,” says Mr Meiller.
He continues: “That then becomes the chicken and the egg problem; if you do not discuss this, the industry will never become mainstream, but because the industry is not mainstream they do not discuss it and that causes the industry to slow down.”
He adds: “So what we are doing is to try and sit down with those brokers through all of our fronts... and talk to advisers about equity release.”
In his current role, Mr Meiller is responsible for looking after and launching lifetime products and product innovations for the lending business of Legal & General.
In total, Mr Meiller has more than 14 years’ industry experience, from markets including the UK, Brazil and Mozambique.
He says this international experience has given him a unique perspective, but that he believes the societal problems that financial services are trying to solve are the same everywhere.
Why later life lending is on the rise
According to the Equity Release Council’s spring 2019 market report, published April 2, demand for equity release continued to grow across all UK regions and lifetime mortgages in particular saw a rise of 25 per cent from 2017 to 2018.
According to Mr Meiller, as well as improvements in life expectancy, there are a couple of key drivers behind this growth.
He says: “Slightly older customers are feeling the pressure of trying to support their family members.
“But not everyone has had the opportunity to build sufficient assets or liquid assets in their pension pots or savings.”
He also notes that lending into retirement on an unsecured basis – any type of lending where this no collateral – is growing much faster in the UK than in other parts of the world.
He continues: “The second important driver is that people simply do not have sufficient pensions or sufficient planning, and so borrowing to support their lifestyle or needs in later life then becomes very important.”
He explains: “Lending, like everything in life, is good up until a certain point and over-stretching is always stressful.”
He continues: “But if we allow this to happen in later life there are fewer options for customers at that stage of their lives to make up for the excessive debts that they created.”
Technology is changing the industry and the way people are interacting with financial services, especially banks, according to Mr Meiller.