The equity release market must adapt products, advice and pricing to cater for a changing market, according to Safe Home Income Plans (SHIP), which has called for a Government-led debate on the issue.
In a discussion paper entitled 'Facing the Future, Redefining Equity Release to meet today's social and economic challenges', SHIP says consumers are putting their equity to wider uses.
It suggests equity release customers now fall into six categories which include those who are struggling financially to those who wish to maintain their standard of living.
In order to meet these changing demands, SHIP says the equity release market must adapt products, advice and pricing and has called for a debate on how this can be achieved.
Alongside the debate which will also include voluntary organisations and regulators, the trade body has also called for the Government to launch a formal enquiry into how equity release can play a role in helping fund retirement needs.
It believes the Government should clarify how benefits eligibility is affected by different types of equity release and make it clear that the equity released is not subject to tax.
Andrea Rozario, director general of SHIP, says: "There needs to be a wide ranging debate about the way housing equity may be used in the future, reflecting wider social and economic trends.
"It is widely believed that the unmortgaged housing equity held by many older people could help with the huge pressures on retirement and care funding. But the case is not yet proven"
Vanessa Owen, head of equity release at LV=, says there are potential risks of gearing all equity release products to those on low income and who are older and vulnerable.
"Although SHIP plays an important role in safeguarding these consumers, gearing all products towards this group could eventually make the market unsustainable in the long term," she says.
"We would like to see the SHIP Code of Practice evolved to allow for greater flexibility in designing products that meet the needs of consumers."
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