'There is no such thing as a typical later life borrower': Jim Boyd: Equity Release Council

FR: This year marks 35 years since the Equity Release Council was founded as Safe Home Income Plans. Looking back, how much has the later life lending market changed since 1991?

It has changed enormously.

When the Council was founded in 1991, later life lending was very much a niche market. The idea that someone might use the value built up in their home to support their finances in retirement was still relatively unfamiliar, and consumer protections were not as developed as they are today.

Fast forward 35 years and more than 700,000 homeowners have accessed over £51bn of housing wealth through Council members. The market has become much broader, with equity release now sitting alongside other forms of later life lending, including retirement mortgage products, providing consumers with more choice.

But the biggest change is perhaps the way we think about retirement itself. People are living longer, working for longer and facing a much wider range of financial decisions in later life. The question is no longer simply how someone will replace their salary when they retire. It is how they will manage their finances across what could be several decades of retirement.

That makes the role of housing wealth increasingly relevant.

FR: The Council has often described its standards as a ‘gold standard’ for consumer protection. How have those safeguards evolved alongside the market?

The standards have had to evolve because the market and the needs of consumers have evolved. The Council is unusual in that we are a representative body and also a standard setter at the same time. That gives us a responsibility not just to represent our members but to help ensure the market develops in a sustainable way that earns and maintains consumer trust.

Some of the protections that are now fundamental to the market have played a major role in that. The no-negative-equity guarantee, for example, gives customers reassurance that they will never owe more than their property is worth. There are also protections around security of tenure, portability and the ability to make penalty-free partial repayments.

These things matter because later life lending involves significant financial decisions. Consumers need to know not only what a product can do for them, but also what protections sit around it.

Our Standards have therefore never been something we can simply set and forget. As products, consumer expectations and the wider regulatory environment change, standards need to keep pace.

The objective is ultimately very simple: a growing market is only a good thing if it continues to deliver good outcomes for the people using it.

FR: The market is increasingly broader than traditional equity release. What does that changing product landscape tell us about the needs of later life borrowers?

It tells us there is no such thing as a typical later life borrower.

Someone may want to supplement their retirement income, repay an interest-only mortgage, fund home improvements or adaptions, help family members, fund unmet care needs or a significant cost. Another person may simply want greater flexibility over when and how they access their wealth.

Those circumstances cannot all be addressed in the same way.

That is why I think it is important that we talk about later life lending as a broader market rather than focusing too narrowly on individual products. Equity release remains an important part of that market, but it sits alongside other options that are sometimes more suitable.

The challenge is making sure that greater choice does not create greater confusion.

Consumers should not have to understand the structure of the financial services industry before they can understand their options. Good advice has an increasingly important role to play in helping people look at their circumstances as a whole and identify what is appropriate for them.

FR: There is growing recognition that housing wealth could play a much bigger role in retirement planning. How significant could this be over the coming decades?

It could be transformative, if we approach it in the right way.

The UK has a significant retirement savings challenge. At the same time, millions of older homeowners have substantial wealth tied up in property. Historically, those two things have largely been discussed separately. That is becoming incredibly hard to justify.

Fairer Finance modelling suggests that by 2040, 51% of UK households aged 60 and over could benefit from accessing housing wealth to support their spending needs, with the potential to contribute £21bn, in today’s money, each year, to grow the economy.

That does not mean we should treat property as a substitute for pensions or assume that everyone will want to use their home to fund retirement. But we should recognise that with millions under-saving for retirement that housing is an important part of the financial picture for many households.

The FCA's description of later life lending as a potential ‘fourth pillar’ of retirement funding alongside pensions, savings and investments reflects that wider shift in thinking.

If we are serious about helping people achieve financial resilience throughout retirement, we need to consider the whole balance sheet rather than looking at each asset in isolation.

FR: As the market grows, how should the industry respond to the needs of vulnerable customers?

This is one of the areas where I think the industry has a particular responsibility.

Later life can entail circumstances that complicate financial decisions. Bereavement, health issues, cognitive decline, caring responsibilities or changes in family circumstances can all affect someone's financial position and their ability to navigate a complex decision.

Vulnerability therefore cannot be treated as a simple box-tick. It has to be part of how the customer journey is approached from the outset.

Our Safe Steps vulnerability guidance hub is designed to help firms do that, providing practical guidance on identifying and responding to vulnerability with greater consistency, clarity and empathy.

Independent legal advice is an important safeguard. This provides a way to assess capacity. People need to understand the long-term implications of decisions involving their home and have the opportunity to consider those decisions independently. 

As the market develops, we need to keep asking whether our practices are keeping pace with those we are serving. Growth and innovation are important, but they must sit alongside strong standards and a genuine focus on consumer outcomes.

FR: The Council has now been setting standards for 35 years. What do you think the next 35 years of later life lending will look like?

The future is increasingly hard to predict, but then, who would have predicted everything that’s unfolded in the last 35 years.

What we can be confident about is that the underlying need is not going away. People are living longer and retirement is becoming a more complex financial phase of life. The question is how the industry, regulators and policymakers respond to that reality.

I would like to see housing wealth become a normal part of the retirement conversation, rather than something people only consider when they have exhausted other options. I would also like to see advice become more joined-up, so consumers can consider pensions, savings, investments and property as part of one financial picture. Consumers should certainly be engaged earlier in their lives, when they can accumulate different sources of wealth, which can support them over greater lifespans.

But the lesson from the Council's first 35 years is that growth cannot come at the expense of trust.

The next generation of later life lending should be more flexible, more accessible and better understood, but it must remain underpinned by the same principle that has guided the Council since its foundation: giving consumers confidence that the market is working in their interests.

If we can achieve that, the next 35 years could be even more significant than the first.