That should offer a sound bulwark between consumers and any danger of mis-sold equity release products.
But how do advisers get to know what equity release actually involves and who ought – and ought not – to be using it? Explaining and justifying pricing, and making sure it offers fair value is, for example, not straightforward. Until recently, only fully qualified professional advisers could hope to tackle the role well.
Meeting the needs of Gen X
But as society ages and defined benefit pension schemes become a rarity – the number of private sector employees still accruing new defined pension benefits was under 900,000 in 2021 – equity release will become more important.
In particular, the government says it fears “a likely crisis of under-saving that will crystallise as generation X retires”.
People in Generation X were born in the years 1965 to 1979 and they are the people for whom “auto-enrolment arrived too late” and who either never had access to DB pensions or found they were withdrawn early in their savings careers.
At the same time, it is estimated that the over 50s hold nearly 80 per cent of all the UK’s privately held housing wealth.
Releasing that wealth, for many people, could mean the difference between a comfortable retirement and a struggle.
A major shift is coming in how people manage their housing wealth, and mortgage advisers need to be ready to tackle that.
John Somerville is director of financial services at LIBF
