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David Burrowes, Chairman of the UK Equity Release Council and an EPPARG Board Member, explains how the UK market has adjusted to the challenges of operating safely in a pandemic, and the importance of standards to the safe growth of this socially important market.

How would you describe the current market for equity release in the UK?

Despite the uncertain climate, the market has adjusted well to the challenges of operating safely in a pandemic.  

Our latest figures for Q3 showed a steady return to something closer to normal activity over the summer, after the market weathered the initial impact of COVID-19. The pick-up was helped by a mix of new enquiries and delayed cases from earlier in the year. We are hopeful and indeed confident that as the industry and our customers are becoming more able to deal with the restrictions that COVID brings, the market will develop and grow over the coming months and years to meet the ever changing needs of our consumer base.

The UK Equity Release Council has recently published its Q3 market statistics for the UK, what are some of the main findings?

The figures showed a steady return to something like normal activity.  Key findings were:

• The number of new equity release plans agreed increased by 41% from the previous quarter.  
• The number remained 9% down year-on-year however.
• There was a gradual increase in new customer activity during the quarter: July saw 3,147 new plans agreed, followed by 3,228 in August and 3,976 in September.
• The number of customers returning during Q3 to take extra drawdowns from their agreed reserves was up 19% from the previous quarter but 30% below the same time last year.
• The amount of property wealth unlocked by new or returning customers was up 38% from Q2 but down 3% from Year 2019.

How has the UK market been adapting its practices in the light of the COVID-19 pandemic? Has the pandemic led to new and innovative ways of engaging with customers?

As a consumer-focused trade body, we are responsive to and closely monitoring the developing situation with COVID-19.

Our members are very much sensitive to individual consumers’ circumstances, particularly those with potential vulnerabilities. A major initiative by the Council was a temporary modification of our face to face legal advice standard, following consultation across our membership, to enable remote legal advice with appropriate safeguards. Delivering this swift initiative ensure the market stayed open and demonstrated the strength of the Council as the representative body for all major players in the UK market from lawyers to financial advisers to providers and funders.

Although this new modification required a more onerous process, this has been popular with many of our customers.  Inevitably technology is being used more and more for virtual meetings with respect to financial advice, although our Financial Regulator has guided that face to face meetings are possible if it is absolutely necessary (clearly with the obvious safeguards). 

The Equity Release Council (and its predecessor SHIP) has been a pioneer in establishing standards for the equity release industry and is seen as a reference at global level. What importance do you attribute to the role of standards in safely growing the market in the UK and beyond?

We are proud of the work that we have done in conjunction with our members to develop high standards across the industry. 

Our safeguards and protections enable consumers to trust that equity release is safe and reliable. It is through our standards that we lead a consumer focussed market and accordingly we believe they are core to the safe growth of this socially important market.

The evolution of our standards has been a key feature of our work over the last two years. Following a major consultation with members, our financial regulator and Government, we have developed an outcomes and principles based standards which we believe are the ‘gold standard’ for later life property based lending in the UK.

We continue to evolve our standards and following a major ‘oversight’ review earlier this year to ensure that our standards are meaningful for our members and consumers we are in the process of recruiting a Risk and Compliance team.

How do you assess prospects for growth in the UK equity release market for the year to come?

The core drivers for the growth of the UK equity release and later life lending markets are strong. This is underpinned by three pillars. 

First, consumer demand as our ageing population grows fast and requires additional funding to support their needs in later life, whether it is inadequate pensions savings or to adapt a property for care needs. 

Second, the market has attracted major financial companies who have developed a range of attractive products options for consumers. In the last two years we have seen product options grow from 48 to over 300! 

Thirdly, the Council sets the standards and protections which enable consumers to trust that equity release is reliable and strong.