IFA specialist Key Retirement Solutions (KRS) is hoping to roll out its own equity release reve...
IFA specialist Key Retirement Solutions (KRS) is hoping to roll out its own equity release reversion scheme in June. The product is a few weeks away from finalisation.
KRS says the impending product will be rolled out in a three-tier process and not all IFAs will have access to the product initially.
Firstly, IFAs familiar with dealing with both mortgage and reversion schemes will be targeted, followed by IFAs familiar with just mortgage schemes (traditionally the most popular scheme) before KRS looks at marketing their reversion schemes to IFAs without experience of the equity release market.
The product has been put together by taking the strongest points of reversion schemes already on the market and piecing them together said Dean Mirfin, head of development at KRS.
"It will be as competitive as anything we sell and will hopefully succeed in growing the market," says Mirfin.
KRS, which is a retirement specialist and thoguht to be the only national IFA to specialise in equity release, claims one of the big incentives to launch its own product is to grow the market and increase competition.
KRS believes one of the major issues hindering the growth of the market is the current lack of providers and the group is encouraging more to join in.
The main players now are Northern Rock, Norwich Union, Hodge Equity Release, GE Life, AMP, Bridgewater and Home and Capital Trust. AMP doesn't sell through IFAs at present, but is expected to distrobute through the IFA sector by the end of the year, according to KRS.
Despite the provider shortfall, the market has enjoyed impressive growth over the past five years - no less than 700% and KRS says its business has doubled or trebled every year.
In 1996, equity released in the UK market was £70m and by 2001 it reached £572m - KRS estimates this is only about 1% of the total market. Looking ahead, the Council of Mortgage Lenders predicts the market will increase to £50bn by 2008.
Onlookers suggest market growth will be generated by a number of factors. These include the looming pension shortfall facing the UK, increasing property prices and ownership and an increasing number of product providers. Equity release is also a means of lessening the impact of government tax on pensions - it is not subject to capital gains or income tax.
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