27 July 2009 / by Rachael Stiles
The equity release trade body SHIP (Safe Home Income Plans) has opened a debate to explore ways of meeting the needs of a shifting equity release customer base.
SHIP is launching a discussion paper at an industry conference this week, which will include representatives from the Government, regulators, consumer organisations and the voluntary sector.
The paper, entitled ‘Facing the Future, Redefining Equity Release to meet today’s social and economic challenges’, aims to address the needs of the ever changing demographic of homeowners who are interested in equity release.
SHIP says that there is no longer a ‘type’ of equity release customer, but many types, and the reasons that people turn to it have become similarly diverse, including funding care, tax and estate planning, or simply boosting their income to enhance their lifestyle.
While SHIP believes that the current equity release sector is already responding to the shifting trends in the market, there are still some “serious constraints” which need to be addressed, it says, and the weaknesses in the equity release market are restricting the sector’s ability to adapt and develop products, advice processes, compliance regimes and pricing.
As part of its discussion on equity release, SHIP is once again calling on the Government to play a role in promoting equity release as a viable tool for funding retirement, as it has done in the past, by requesting that it launch a formal enquiry into the role which equity release could play in funding the retirement needs of pensioners, today and in the future.
Commenting on the discussion, Andrea Rozario, director general of SHIP, said:
“There needs to be a wide ranging debate about the way housing equity may be used in the future, reflecting wider social and economic trends. The people who could benefit from equity release and the products and risks associated with them are not the same as they once were.
SHIP has identified six main categories of equity release customer based on their financial requirements – those wishing to fund care in the home, supplementing a low income, those struggling financially, newly retired people wishing to maintain their standard of living, retirees looking to improve their lifestyle, and those wanting to make use of equity release for tax and estate planning purposes.
“At present,” Ms Rozario added, “products available tend to be ‘one size fits all’ whereas people’s needs vary greatly.”
She continued: “As an industry we wish to determine how we can respond to this challenge. We invite, as well as Government, the FSA, the third sector, consumer bodies, the legal industry and advisers to work with us to determine how we can help the market to grow safely and adapt for the benefit of the consumer, the government and the wider economy.”
© Fair Investment Company Ltd
Thinking about equity release? See if it’s right for you, get free equity release advice and quotes from an expert, and read about other people’s equity release experiences: