Equity release still has to fight against its historically poor reputation, writes Peter Welch, head of sales and distribution at Bridgewater Equity Release
I have watched with quiet bemusement the media furore about ‘super injunctions’ and their use by various sports people, celebrities and those said to be ‘in the public eye’. Regardless of your thoughts on the escapades of someone, who for now we will call, Bryan Riggs, I am in no way surprised that certain individuals want to cover up ‘indiscretions’ given that it is likely that these negative accusations, rumours or facts will no doubt haunt them to their dying day.
Riggs’ lawyers have not helped him however you can see why he went to all ends in an (undoubtedly futile) attempt to save his reputation as a family man. While in this case it would have been better for all concerned if the truth had come out much earlier, those who might be deemed to be celebrities obviously look at history when deciding whether it is worth the bother not to secure the same ignominy that has accompanied others.
For instance, I probably only need mention such names as Marianne Faithful, Richard Gere and (for our younger readers) Fatty Arbuckle. All have either had specific stories attached to them or had their character questioned or dealt with allegations which effectively ended their career.
A good reputation takes a long time to acquire and can be lost in an instant. Indeed, in financial services product reputation can be destroyed from the outset and all attempts to secure a good name can be doomed to failure. There is also the path that equity release has seemed to be left on, namely a reputation which has been tarnished by products which were not even ‘equity release’ however damage by association has been severe.
For the equity release industry since those days back in the late 1980s/early 1990s it has been something of a slow walk to enlightenment. Yes, considerable progress has been made however the market is still fighting the poor reputation of products past and, even with regulation, that reputation has still not been restored in the eyes of many potential customers. When we talk about the growth of the equity release market, the reasons of ‘customer distrust/misconceptions’ are still raised as valid reasons why the sector has not made the great leap forward.
One wishes things were different however even though these misconceptions still exist there has been some progress. A recent survey by SHIP highlighted the fact that potential clients, even with those traditional misconceptions about the products, were actually not being put off looking at the equity release option when it came to supplementing retirement income or paying off debts or covering care home costs, etc. Even while they admitted they found equity release ‘confusing’ almost 50% said they felt it should be explored as a retirement option.
Which perhaps provides a real lesson for us to learn. Simplicity is going to be vital if we are going to truly educate the masses about the true nature of equity release, its potential and where it can provide a solution. The message here is that we are still too complicated for many to understand now at this point you might say that this is where the adviser steps in to make it understandable, and I would agree. However, there are some product areas/criteria and concepts which will still be difficult to couch in simple terms and perhaps we need to look again at these.
There were also some rather worrying statistics in the SHIP research, namely that 40% of those surveyed felt that sale and rent back was a type of equity release. Regulation has therefore not shown the differences in these products clearly enough. Also 35% felt equity release was a product of last resort and we need to get the message across that this is not the case.
Securing a renewed reputation for equity release is a mountain to climb one I would suggest we are only half way up. And let’s not forget it’s taken us the best part of 15/20 years to get this far. Our focus on consumer education, advice and transparency is right clearly in our opinion we must do more to get rid of the assumption that ‘lifetime mortgages = equity release’. The roll-up of interest always seems to be a major concern for potential equity release customers and yet we have a situation where the products that do not do this are often overlooked or ignored. How important could this decision be particularly in a falling house price environment?
It is these issues and many more that we must continue to tackle if we are to eventually climb to the reputational peak we all want to reach.
