IFAS SET TO MISS OUT ON BUSINESS OPPORTUNITIES AS EQUITY RELEASE BECOMES A REAL SOLUTION FOR MANY CONSUMERS
IFAs are missing out on increased business opportunities in equity release due to perceptions of a complicated specialist market and fears of miss-selling, according to members of Safe Homes Income Plans (SHIP) - the trade body representing 21 providers and over 90% of the equity release sector by volume.
The annual SHIP Member Survey of 2006 reveals that almost all SHIP members believe there is currently a shortage of IFAs offering advice on equity release.This concern was rated as the top issue for the equity release market in 2007 closely followed by consumer concerns and poor understanding of equity release and the negative media coverage the market has received over previous years.
Members believe that this shortage has occurred due to the false perceptions held amongst IFAs that equity release is still a very specialised area with high risk for miss¬selling.As a result, the number of IFAs advising on equity release is not expected to increase significantly in 2007.This shortage of advisers is also expected to stifle the potential for growth in the market with severe ramifications for consumers looking for advice in this area.
However, SHIP members remain unanimous that equity release will increase in 2007. Economic and social factors such as the growing pension gap and an aging population means equity release is now a very real solution for financial planning in retirement. As a result SHIP members forecast an average £2,416 million of new business in 2009 (predicted to be around £1500 million for 2006 when full year figures are released) as the equity release momentum continues.
Given the potential of the sector, SHIP members feel that IFAs who shy away from this market are missing out on increased business opportunities and additional fee income whilst also leaving the consumer in a position where good advice is unavailable. Major players within the industry will also continue to dominate the market and will severely curtail competition; keeping costs high for consumers.
Such findings highlight the need for SHIP to prioritise and continue its attempt to build confidence within the market throughout 2007; promoting equity release as a mainstream financial product and encouraging IFAs to become involved in the sector.
Jon King, Chief Executive of SHIP commented:
“Equity release business has continued to grow year on year and is now a very real solution for many UK retirees. Our members also whole heartedly believe that this demand will continue to grow over the next few years.“However, the SHIP Member Survey shows that IFAs still appear shy of the sector and it is therefore important for the industry to address this issue during 2007. Increasing confidence within the IFA sector and ensuring they have access to all the information they require is vital in order to maintain strong growth and improve consumer confidence in equity release.”
-Ends-For further information, please contact:
Laura O’Connell/Fiona Chow/ Emma Bowden The Wriglesworth Consultancy Phone: 0207 845 7900
Jon King SHIP Chief Executive Phone: 02920 371725
Notes to Editor
About SHIP:
Safe Home Income Plans (SHIP) is the UK’s leading professional body for equity release product providers, representing the interests of its 21 members who provide home income and equity release plans. It was launched in 1991 to promote safe schemes. At present, 90% of the equity release market (in volume terms) is represented by SHIP members.
SHIP’s current 21 members* are: Bradford and Bingley Ltd, Bridgewater Equity Release, Bristol and West Mortgages, Ecclesiastical Life, GE Life, Hodge Equity Release, Home & Capital Trust, In Retirement Services, Just Retirement, Key Retirement Solutions, National Counties Building Society, New Life Mortgages, Northern Rock, Norwich Union, Partnership Home Loans, Portman Building Society, Prudential, Retirement Plus, Standard Life, Stonehaven Equity Release, Stroud and Swindon Building Society.