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Inequitable treatment of equity release

Wasn’t it comforting to see financial guru Martin Lewis on TV last Monday having yet another go at an industry which is no doubt making so much money for him?

For those of you who didn’t see last Monday’s Tonight with Trevor MacDonald programme on ITV, the show looked at equity release – or rather it didn’t. The programme focussed on a number of cases studies in which clients or their children were not happy.

Making up a small element of the show, the opportunity was provided for Jon King, chief executive of Safe Home Income Plans, to comment on the fact that this is not in any way reflective of the market today.

The first case looked at a plan sold 20 years ago – the type which has been outlawed for new customers for years.

The second looked at shared appreciation mortgages and the third was an NPI home income plan. Nobody disputes the issues surrounding the first two case studies – namely that clients have suffered in a number of ways as a result of taking out these plans.

But the NPI case was not so much about the plan but whether the client understood it. Following the death of the client, his daughter complained. The Financial Ombudsman found in favour of NPI.

Nobody would dispute the fact that all three were unhappy cases and that fact should not be ignored. But what deserved a lot more focus was the fact that this was history and more interesting is what has improved dramatically in the market over recent years.

It is saddening that those people who are advising on equity release today and who did not advise on any of the plans featured, should be held to ransom on the back of history.

Where were the happy clients who do not have problems with their choice to take out equity release products? There are many thousands of contented clients out there who will have been insulted by what they saw on their TVs last week.

However, Lewis did go as far as to say equity release deals may be right for some people. When will he accept that many people do not want to downsize, move home or can’t afford other methods of borrowing?

To imply the product is wrong is not appropriate. People considering releasing equity need to make educated decisions, which they can do with the right advice.

The positive message to focus on in the programme was the final comment from presenter Jonathan Maitland in which, to paraphrase, he said that if someone is considering equity release they should seek independent advice and also speak to their family.

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