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The Equity Release Council's 24th Annual General Meeting will cover topics such as media coverage trends, social media engagement, new brochures, upcoming events, public affairs, stakeholder engagement, and Solvency II.
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Equity Release Council 24th Annual General Meeting 25th April 2018 David Burrowes, Chairman
Director’s Report & Financial Statements To approve the Directors’ Report & Financial Statements for the year ended 31st Dec 2017
Auditors appointment To re-appoint Hargreaves, Brown & Benson as auditors of The Council until 2019 AGM at a fee to be fixed by the directors
Membership • As at 18th Apr 2018 • Individuals710 • Firms – 229 • In Application Process • Individuals - 43 • Firms – 16
Equity release media coverage trends Q1 2018 263 pieces of coverage in Q1 2018 – a 63% annual increase year on year 66 pieces of national coverage in Q1 2018 – compared with 29 pieces in Q1 2017
Media sentiment towards equity release in Q1 2018 Q1 2018 sentiment towards equity release was +1.5 – up annually from +1.4 Q1 2018 sentiment towards The Council was +1 – up annually from +0.7
Social Media Q1 2018 • ERC increased resource in this area in 2018 and have seen great results! • Focused on sharing varied content and info about the Council, it's members & wider industry • Using visual imagery to increase engagement • Shared the stories and photos from the COO and Chairman roadtrips • Seeing a huge jump in tweet impressions and profile visits • More focus on sourcing and following influencers and stakeholders Twitter LinkedIn
New Brochures for 2018 Members Brochure For new members Members Prospectus For prospects
Coming soon – New consumer brochure If you would like to take advantage of a bulk print run on the new consumer brochures, contact admin.
ERC on the platform Q1Hodge Conference FSE GlasgowNew HorizonsQ2HLP – 3rd MayFSE - Manchester 16th MaySLC/BLG – Various May & JunePure Webinar – 30th May National Later Life Adviser Conference – 21st JuneNew Horizons – Various Dates
Public affairs Single Financial Guidance Body Circulated briefing to interested and supportive MPs ahead of the Bill’s second reading in January. Suggested amendment to Public Bill Committee Members - Single Financial Guidance Body should offer financial guidance on the use of housing wealth during retirement. Lending into retirement Participated in HM Treasury roundtable in February on how market is innovating to support older borrowers. Leasehold reform Representations made to Rt. Hon Sajid Javid, Communities and Housing Secretary, with aim of legal exemption for home reversion plans. Consultations Joint Committee on adult social care; FCA – future approach to consumers; Pensions and Lifetime Savings Association – better retirement outcomes.
Social care Stakeholder engagement Government roundtable on care and support reform, hosted by Economic Secretary to the Treasury and Minister of State for Care. Meetings with Special Adviser to the Chancellor; Chair of Housing, Communities and Local Government (HCLG) Committee – how equity release can help in meeting care needs. Raising the profile HCLG Committee’s final report into housing for older people: “Equity release and re-mortgaging are possible routes for older owner occupiers to fund repairs or adaptations to their homes” [para 39]. New Single Financial Guidance Body “responsible for providing specialist advice tailored to the financial circumstances of older people. It should signpost older people to mortgage brokers, banks and building societies who can offer advice on mortgages and equity release, shared ownership and shared equity, and on re-investing the proceeds of sales.” [recommendation 2]
Retirement interest-only mortgages • Meeting • Council members and FCA officials held session on new defined term ‘retirement interest-only (RIO) mortgages.’ • Presentation slides available in members’ area of Council website. • Council response • Support for innovative and flexible option for older consumers. • Quality advice, guidance and signposting will aid consumers. • Consumers need awareness of range of potential options available.
Parliamentary reception • Monday 9 July, 4-6pm • Members’ Dining Room, House of Commons • Event sponsor: Crispin Blunt MP for Reigate www.parliament.uk
Solvency II - Facts 95% of Equity Release is funded by insurance companies. Insurance companies earn an additional yield from ER investments–compared to typical government bonds, which allows them to offer better returns to e.g. pensions, annuities (plus a natural hedge for increased life expectancy). In the UK, we have a ‘model’ which is prudent to protect policy holders and leading the way to safely develop a much needed product for social and economic purposes. PRA has some concerns about insurance sectors’ increasing exposure to UK property, claiming undue allowances for illiquid assets and has issued SS3/17 on its ‘expectations’.
Solvency II – ERC and PRA and ABI Action Taken ERC, together with the key providers, have over the last six to nine months been engaged in ‘technical’ reviews of the elements of SS3/17. All the major groups have recognised the regulatory risk and this places demands on ERC to play a key leadership role, supported by the ABI and other organisations. There have been meetings with the PRA to explore understanding. Going Forward The work of industry and PRA will continue to protect policyholders and to develop the right implementation of SS3/17 which is proportionate and relevant to the risks. Progress is being made to reduce the threat of adding extra regulatory costs to ER mortgages to consumer or reducing annuities payments. We are engaging with the PRA at an industry and a firm level to ensure the right approach is put in place. Conclusion Ensuring the right level of policyholder protection for ER assets backing annuity liabilities is critical – and also will ensure there is a stable funding platform for the future of ER development in the UK and elsewhere.
Strategy 1. Positive thought leadership a. Redefine the equity release market place b. Understand consumers of today and tomorrow c. Segmented and targeted messaging programme • 1. Targeted collaborative campaign across the sector and member firms, covering entities identified in representative lobbying space. Review vision and future positioning of the market. Develop segmented approach to position new messaging framework. • Research to obtain better understanding of consumer needs and aspirations in later life planning. • Literature review of member research. • Feed research output into 1a and 1c.
Strategy 2. Representative lobbying a. Government; regulators; industry b. Less supportive actors c. Consumer bodies; voluntary sector • Encourage ministers/officials to reference equity release and potential uses. • Influence parliamentary debates on later life and/or financial services. • Liaise with regulators to ensure no barriers to growth of equity release market. Thought leadership papers tailored for specific audiences, e.g. legal sector, professional indemnity insurers. Participate in and/or set up events that attract range of stakeholders, including those on periphery of current equity release market. Engagement with organisations handling public queries - not necessarily from within financial services. Easy to read suite of communications aimed at promoting use of housing wealth; how and where to find out more.
Strategy 3. Leading and setting standards a. Standards fit for purpose in modern market b. Benchmark to promote best practice c. Horizon scan - potential risks and issues Review all aspects of equity release: marketing to advice; valuations to product features. Identify ‘hot topics’ and recommend mitigation strategies. Equity Release Council Rules and Guidance reviewed: Duplication with existing regulation. Potential gaps. Areas where no regulatory or legal protocol, but consumer protection deciding factor. Challenge advice and delivery standards; help firms devise appropriate competency framework. Implement support mechanisms for new and inexperienced. Benchmarking intelligence fed into 3a and 3c.
Q&A Thank you
Chris PondStandards Board Chairman 25th April 2018
Agenda Looking back Looking forward Long term Care - definition Lifetime Mortgage – decision in principle form FCA and FOS complaints data Standards Review Questions
Looking Back The Standards Board had six bi-monthly meetings. Standards Board members over the past year: Susan Jeffery - Adviser Representative David Forsdyke - Provider Representative Claire Barker – Solicitor Representative Mel Kettle - Surveyor Representative Liz Barclay and Jim Dredge – Independent Members Kate Davies – Standards Officer
Looking Forward Membership for 2018-19: Nikki Smith (Just Group) – Provider Dean Mirfin (Key Retirement) – Larger Adviser David Wright (Sixty Plus) – Smaller Adviser Claire Barker (Equilaw) – Solicitor Mel Kettle (Gateway Surveyors) - Surveyor Liz Barclay and Jim Dredge – Independent Members We are also creating an Advisory Panel which will provide a talent pool of specialists who care able to support the Standards Board and other Working Groups as required. Following Kate Davies’ departure to take on the role of Executive Director of IMLA, Jim Dredge will be providing additional advisory services covering compliance and regulatory aspects in support to The Council.
Long Term Care (Rule 4.1) We want customers to fully understand what constitutes ‘long-term care’ at POS and have issued guidance that providers should clarify: whether the provider regards long-term care as being in an institution such as a nursing home; whether moving in with family members or friends, to be cared for by them in conjunction with other carers, is acceptable; and whether the provider requires a certificate signed by an appropriately qualified medical practitioner to confirm that the long-term care conditions have been met.
Life time mortgage decision in principle form We are piloting with L&G an optional process for the intermediary that would enable an agreement in principle to be obtained, before submitting a formal application. This may be particularly helpful if there are “non-standard” considerations.
FCA and FOS Complaints Data Main complaint areas in H1 2017 were: General administration and customer service – 60% of complaints and a reducing trend. Advising, selling or arranging – 24% of complaints - an Increasing trend (up 2%) which we will monitor. Information, charges or performance – 11% of complaints and a reducing trend. Source: FCA complaints from firms with 500+ reportable complaints Note: Data from H2 2016 onwards includes all complaints.
Standards Review At the Board strategy meeting in July 2017 it was agreed that the Council should review the hard-coded principles, standards and rules. An update will be provided to the November Board. These have for many years provided a unique selling point for the sector and are viewed favourably by the media. Regulators have been moving towards an outcome-focussed or principles-based approach for some years. This review will consider: Are the rules and standards still fit for purpose in the current financial planning landscape. Where can we add value? Should we move towards a principles based approach?
