Equity release lending levels are likely to increase considerably over the course of this decade, said Association of Mortgage Intermediaries’ (AMI) director Robert Sinclair at the Financial Services Expo (FSE) London on Thursday.
Sinclair was talking about the various opportunities that exist for advisers and highlighted equity release as a sector whose “time has come”.
“I can see equity release being a £5bn per year market before the end of the decade,” he said. “I’ve often said equity release’s time will come and I think we’ve reached that point. We will see certainly see bigger lending names coming into the market. However I’m still disappointed that the regulators still see this as an unsafe business. With independent advisers, independent solicitors, I see this business as one of the safest places in the market.”
Sinclair looked in detail at the FCA’s recently published advice market review and suggested every mortgage market stakeholder should read the report given it shows what good and bad advice practice looks like, and gives practical examples for advisers to follow.
The AMI chief said the text on networks was “the most emotive part of the report”. He said: “When the FCA talk to networks there’s a mismatch between those who have the responsibility for the network and the consumer. Network heads have the responsibility for the advice given to the customer, not the Principal of the AR firm. At the moment they’ve been delegating that responsibility down.”
Sinclair said networks may well have to reconsider their pricing and fee models to AR firms in order to ensure they reclaim that responsibility.
He also said there were challenges ahead for both first and second-charge brokers in terms of the path they choose post-MCD. Following comments made by the FCA’s Keith Hale regarding second-charge brokers who do not offer first-charge mortgages but see customers where they may be the appropriate product choice, Sinclair said: “Anyone looking at seconds, has to also consider if a remortgage or further advance is more appropriate. It is likely to be uncomfortable for brokers to send a customer away, to say ‘you have to consider these other options first’.”