FCA to investigate whether regulation is holding back equity release

The FCA says it will investigate whether regulation is holding back the equity release market in the UK.

At an FCA-organised conference in London today, director of strategy and competition Christopher Woolard called the UK and European Union equity release markets “relative minnows” compared to the US. He cited EU calculations that 13 member states had recognised equity release markets but that these accounted for just 0.1 per cent of total mortgage lending.

Speaking during a journalists’ briefing, acting director of supervision – retail and authorisations Linda Woodall said the FCA would investigate whether regulation was holding back growth in the sector.

She said: “We need to look [at equity release] because in comparison to other countries equity release has progressed pretty slowly in this country. That doesn’t mean we should take off all of the constraints.

“It is a product we think has a place but anybody considering such a move should do so advisedly because it can be expensive.”

She added that the regulator wanted to ask the industry whether there are possible alternatives to equity release that could be offered to customers instead.

She said: “I don’t know whether we can say that, at this stage, it means loosening [restrictions on the sector] but it means we have to look at it but also to stimulate consideration of other products that can maybe come before equity release that maybe do not exist at this time; products that flex with borrowers’ needs as they get older.”

In the first half of the year, equity release providers lent £710m to customers – a half-yearly record. However, to put this into context, any one of the largest 15 lenders in the UK lent either the same or more individually than the equity release sector did as a whole in H1.