The Council of Mortgage Lenders has given its backing to equity release schemes in a bid to help bor...
The Council of Mortgage Lenders has given its backing to equity release schemes in a bid to help borrowers cope with the costs of long term care.
Philip Williamson, CML chairman and retail operations director at Nationwide Building Society, said that over £800bn in assets had been built up by homeowners who may need to access these funds to pay for long term care.
He said: "The management of equity release is a key issue about which the industry will require increasing guidance.
"A clear regulatory structure is a fundamental precursor for consumer, lender and potential investors' confidence. The CML will be continuing to develop its thinking regarding the way forward on this important issue in the coming months to forge a consensus for policy development."
Nick Richards, head of marketing and product development at GE Life, said the group welcomed any initiative to boost awareness of equity release as a viable and safe financial option and would even consider partnership arrangements with suitable lenders.
However, he added: "We would be looking for the equity release market to be developed only in a regulated environment so that customers are fully protected. As a member of SHIP (Safe Home Income Plans) we do not want to see a repeat of the problems experienced by some elderly people in the late 1980s."
Regulation of equity release schemes will fall to the FSA.
Michael Bolton, marketing manager at sub-prime lender Future Mortgages, added: "The Government has already expressed its ideal of ensuring that the industry is adequately insured for the future.
"With property values at current levels, equity release products, nicely dovetailed within the protection market, seem to be the way forward."
l The Faculty and Institute of Actuaries is currently looking into why few people take advantage of equity release products. The Equity Release Group, chaired by Desmond Le Grys, is also assessing the impact of equity release on inheritances for children and grandchildren and whether the products are seen to be trustworthy.
