The equity release sector contracted following Northern Rock's collapse in 2008, falling by 14%, according to the UK Equity Release Market Monitor from Key Retirement Solutions.
Key's most recent analysis shows the 2008 equity release market dropped to £1.18bn, from £1.39bn in 2007, with the number of new plans was down 14%.
Key's own results bucked the downward market trend, with the firm increasing lending by 4%, boosting its market share by 5% to 25% of equity release distribution in the UK.
Dean Mirfin, business development director at Key Retirement Solutions predicts the sector will fair better in 2009, noting that inquiries are already looking healthy.
"But we certainly expect some providers to disappear, maybe by the end of this quarter. Competition is so fierce in this sector that there is not much difference from being a top three provider and not lending at all."
Mirfin also expects the FSA to increase its activity in the sector, singling out brokers who "dabble" in the market but may not have adequate systems and controls in place to give the best advice.
He concludes: "The regulator needs to fire a few warning shots. More than in any sector the FSA has laid down what it expects to see from brokers and we expect they will become more active this year."IFAonline
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