The programme specifically looked at the past failures of the market alongside predictions for its future stability, after it was announced that the sector would become regulated by the FSA in April.
Industry experts noted that there is currently around £700-£800 billion tied up in the estates of those over 60 years old, an amount which could even top £100 billion in the next few years.
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It was said that equity release providers have learnt their lesson since the less regulated environment of the 80s and 90s, which saw the case studies from yesterday evening’s programme suffer losses of up to 90 per cent of their estates.
However industry professionals did say that there was still negative scope for the market, and equity release is not a decision retirees should take lightly. Martin Lewis of MoneySavingExpert.com, went as far as saying that over the next 5-10 years, equity release could indeed become ‘the next scandal, after endowments and pensions.’
One couple whose situation was featured in the programme were looking for ‘a little bit of a top-up’ in their monthly income, yet ended up paying back over half a million to an undisclosed company after NPI had sold the risk on in 2003. This was five times more than the amount that was originally borrowed and 90 per cent of the couple’s estate, leaving their children with very little inheritance.
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Another man is living in a mobile home as a result of entering into a shared appreciation scheme because ‘if Barclays had said it was a good deal, then it was a good deal’. After signing a highly complex contract, he ended up paying back five times the value of his original £20,000 loan and says that he will never be able to buy another house.
However, the introduction of self-regulated bodies set up to better the market like SHIP, will hopefully now mean that these unfortunate scenarios will become a thing of the past. Those taking out an equity release plan can rest assured that the debt will never exceed the value of their home and they will be able to move house in the future.
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Alan Bannister, head of marketing at Retirement Plus comments: "The equity release market has seen a whole raft of new products come to market over the past two years. These not only offer the customer more choice to fit their circumstances but also offer greater degrees of flexibility and amounts of cash that can be released.
"With the home reversion market looking forward to being FSA regulated on 6 April 2007, the customer will be further reassured that equity release is to be seriously considered as part of a broader approach to financial planning.
"Retirement Plus believes that people who are happy in their homes supported by the right product will look after them well, leading to a good appreciation in value.
"The Property Plan tries to achieve this by including many lifestyle features not currently permitted by other equity release providers in the market. In particular it tries to cater for the unforeseen event, where sympathy and understanding is so necessary. This belief goes some way to reinforce the fact that Retirement Plus will accept business only in situations where its customers have received advice from qualified brokers registered with the Financial Services Authority."
