Speaking to FTAdviser, Equity Release Council chief executive, Jim Boyd said that despite the fact there were “extremely few” upheld complaints about equity release this year, the Council will work closely with the Fos to “understand the circumstances involved where customers or their family feel something is amiss”.
According to the Fos, in 2021/22 there were 475 new complaints related to equity release.
Out of all the equity release complaints, 493 have been resolved with an 8 per cent uphold rate.
FTAdviser understands that the proportion of Fos cases related to equity release products is relatively low compared to its overall workload.
“By sharing insights and themes with our members, we want to foster the market’s culture and commitment to self-improvement, to complement the regulator’s work,” Boyd said.
This year was a record year for the equity release market with more than £5bn of annual lending activity projected for the first time.
The sector saw record customer numbers in the first nine months of the year until political turmoil took hold in September following the ‘‘mini” Budget.
In the weeks that followed, advisers reported a significant drop in equity release business as clients hesitated to lock into deals at 8 per cent interest rates in the hope they would come down.
However despite these challenges, Boyd is of the view that the long-term prospects of the market remain strong.
“The signs are we may be past the worst when it comes to the impact on interest rates, although clearly wider concerns about the economy are here to stay for the foreseeable future,” Boyd said.
More than 1,800 firms now pledge to practise in line with the standards set by the Equity Release Council.
The past year has seen the likes of Deloitte and EY add their names to the list, a development Boyd described as “a sign of market maturity as well as future potential”.
But despite its growth, the equity release market has not been free from criticism.
Back in April, the Financial Conduct Authority warned advisers it would look again at the equity release market to make sure it is working in the best interests of consumers.
This followed a review by the FCA in 2020 which sounded alarm bells over unsuitable equity release advice.
Since then, the Equity Release Council has taken some action to improve consumer outcomes and protections.
In March, it made penalty-free partial repayments, a “standard feature” for all equity release providers.
Acknowledging this progress, Boyd added: “Equity release has proven its flexibility in recent years and work must focus on bringing the benefits to a wider audience.
"We have been heartened by levels of engagement and participation among our growing membership in regulatory, policy and compliance work to embed and expand best practice, so customers’ trust in equity release continues to be rewarded.”
Looking to the year ahead, Boyd sees the consumer duty as being the most significant change for retail financial services since the great financial crisis.
In his view, the legislation is “in keeping with the Council’s desire to see consumer-centric financial products backed by a commitment to going above and beyond a box-ticking, ‘minimum standard’ approach.”
“Enacting the consumer duty will require a process of cultural change across all parts of financial services, and we are committed to supporting members through this. Implementing the consumer duty will require significant focus in the first half of 2023,” Boyd said.
He added: “Deloitte is supporting the Council to produce a guidance document for distributors and lenders relating to the key considerations and inputs when developing a fair value framework and completing a fair value assessment, which we hope will be of help to our members.
"We will also be hosting a webinar with the FCA on the consumer duty for members in January."
jane.matthews@ft.com
