At the heart of the SHIP Paper entitled Facing the Future, Redefining Equity Release is new research which shows that there is no longer one "type" of equity release customer, but many. People, at or after retirement, turning to equity release products are becoming more diverse in their needs and circumstances, and are putting their property equity to a much wider set of uses than before, including funding care, tax and estate planning, or enhancing their lifestyle.
Yet SHIP is concerned that while the current regulated equity release sector is doing much to respond to these trends, there are some serious constraints. Indeed market weaknesses are restricting the sector's capacity to adapt products, advice processes, compliance regimes and pricing to fully meet these emerging needs.
As a result, SHIP is launching a debate - involving key stakeholders, such as Government, regulators, consumer organisations and the voluntary sector, as well as the equity release industry - into how the sector can evolve to better meet the needs of different types of customer.
As part of this discussion, SHIP is calling for the Government to launch a formal enquiry into the role which equity release could play in helping to fund today's and tomorrow's retirement funding needs.
Beyond today's launch SHIP will debate the issues with all of these stakeholders and subsequently announce the findings of this process.
SHIP has identified many areas that could evolve to fully meet the needs of all customers wishing to utilise property equity, but the big question is when, if ever, it might be prudent to allow that evolution. Key topics for discussion are:
- The capacity for product providers to innovate and improve the flexibility of what is offered to customers, both to traditional customers for which strong safeguards are essential and emerging, better off customers. Equity release is currently regarded as ‘high risk' for both. There is no ability to reflect degrees of risk appropriate to different client types
- The cost structure of products relevant for each type of customer: full guarantees are very valuable for many customers, but may be an unnecessary expense for others.
- Whether Government can clarify how benefits eligibility is affected by different types of equity release and make it clear that the equity released is not subject to tax
- Whether, to increase the safe availability of equity release, Government could consider any element of state support, for those most in need, as has been adopted in other countries
