A new report commissioned by the Equity Release Council has called for coordinated action by industry, government and regulators to help consumers better plan for retirement.
The report ‘Later Life Lending: Great Expectations’, authored by Jon Dunckley, director of About Consulting Group, sets out the challenges facing the retirement landscape, including reducing retirement income shortfalls, funding social care costs, enabling the intergenerational transfer of wealth, bridging the gender pension gap and improving the energy efficiency of homes to meet net zero targets.
It sets out 21 recommendations across four areas, spanning government policy, regulation, industry and consumer education, for later life lending products to fulfil their potential and support good outcomes.
As a first step, the report calls on the government to create “a narrative of opportunity that empowers people to take advantage of all their wealth and assets,” and tackle legislative barriers preventing homeowners from unlocking property wealth.
The report also urges the regulator to have open dialogue with the equity release sector to highlight the positive role property wealth can play in later life finance and address the regulatory divide and differing CPD requirements which separate the equity release and mortgage markets.
In addition, the report has called for updated adviser exams based on new Approved Examination standards and greater collaboration between trade associations and professional bodies to create stronger referral processes between later life mortgage advisers and other specialist advisers from pensions to wealth advisers.
Finally, the report outlines the need for cross-sector communications to raise awareness around property wealth and later life lending products.
Its publication follows a milestone year for the equity release market, with a record 93,421 homeowners aged 55 or older using new or existing lifetime mortgages to withdraw £6.2 billion of property wealth.
David Burrowes, chair of the Equity Release Council, said: “In the twenty years since residential and lifetime mortgages became formally regulated, property wealth has emerged as a major component of modern retirement planning. The UK’s ageing population needs safe and accessible later life lending products to make better later life living standards a reality.
“This report provides essential, and most importantly, objective clarity on the challenges to build on the flexibility and product innovation that has emerged over the last decade. The social benefits of accessing property wealth are beyond doubt, but as this report shows, there are still multiple barriers to overcome.”
Burrows said greater coordination and collaboration across political, regulatory and industry stakeholders are essential.
He added: “These recommendations will inform our work towards a future where every home can provide its owner with the opportunity to enjoy a better standard of life or give vital support to younger generations.”
Jon Dunckley, report author and director of About Consulting Group, said: “Despite seeing major progress on product innovation and advice standards, many consumers and their advisers still have their eyes closed to the potential of property wealth and later life lending products to improve their life experiences.
“There is huge scope for property wealth to offer real solutions to today’s financial challenges on an individual and societal level. For that to happen we need to develop a more joined-up approach, from government to regulators and advisers.”
