December 2007

Equity release

Meeting customer needs

Tell us about your product? How does it work?

Prudential has been in the lifetime mortgage market since 2004. Throughout this time we have generated a wealth of insight detailing how we can more closely meet the needs of advisers and their clients. The one piece of insight that has remained true throughout this period is the desire for product flexibility, giving advisers more credibility around their provision of advice and clients the reassurance they need that their product purchase is meeting their needs.

With this in mind we have just launched our most flexible product to date, the Prudential Lifetime Mortgage. Clients now have the choice of selecting either a drawdown or a lump sum product:

- Our multi-award winning drawdown product, now called Increasing Cash Release, allows clients to release an initial sum (minimum £10,000) and then secure further funds from their reserve (minimum of £3,000) as and when they need it. We are the only provider to automatically increase LTVs by 1% per annum (up to 35%) and place no time limits on the availability of this reserve and no additional review.

- Our Lump Sum product allows clients to release equity from their homes by way of a single cash lump sum. The LTVs applicable on this product are higher than the Increasing Cash Release.

We have also introduced two innovative product bolt-ons that can be applied to both products:

- Our Equity Guarantee option allows clients to ring-fence a proportion of their existing house value, without reducing their LTVs. This answers a key client concern about leaving an inheritance in the event of a property crash.

- Clients can also choose to apply a Maximum Release option to their chosen product. This option gives clients up to an extra 5% on their LTVs (up to a 40% maximum) providing access to an even larger loan amount should they need it.

To ensure that we are being as transparent as possible in terms of our pricing, we have also introduced a menu-based approach to our rates. This means that the interest rate we apply to the loan is dependent on the product selected, the type and number of bolt-ons chosen as well as the value of the initial loan. Clients can now clearly see the impact of their product selections on the rate applied to their loan.

We've also broadened our key eligibility criteria, dropping the minimum age to 55 (from 60) and the minimum property value to £100,000 (from £125,000). Minimum loans are £10,000 for Increasing Cash Reserve and £20,000 for Lump Sums.

Who is it aimed at?

The enhanced eligibility criteria, new product features and transparent approach to pricing are designed to help existing writers of lifetime mortgages build their businesses. We believe these features will allow them to target a more diverse customer base and attract new clients.

We also want to attract new advisers to this market and these products now fit perfectly within the needs of retirement planning and as such will bring more retirement advisers to this market.

How does it differ from other equity release products currently on the market?

We believe Prudential Lifetime Mortgage differentiates itself in the following ways:

- We offer a single lifetime mortgage wrapper that allows advisers to operate across the market.

- We are the only provider to offer a truly flexible drawdown product, offering a cash reserve that increases by 1% per annum (up to 35% LTV) while also imposing none of the restrictions required by other providers.

- The provision of an equity guarantee option that does not impact the amount of cash a client can release.

- A clear, transparent pricing policy where customers pay for the features they select.

- The no maximum loan and no maximum property value are also a huge feature.

- We've been awarded AA+ rating by Standard & Poor's, the second highest rating available

- All backed up by award winning service.

How do you engage with advisers to ensure they know how this product works?

Prior to the launch of Prudential Lifetime Mortgage, we tested the product concept with a cross-section of the adviser market and used the feedback to refine and build the proposition. This research also helped us develop tailored support mechanisms to aid product understanding for specialist firms through to advisers who are not currently operating in this market.

Additionally, we have a team of lifetime mortgage experts who are constantly out on the road talking to advisers and providing product support. Advisers can also contact our dedicated adviser line on 0800 731 5544 where they can get technical help on the product.

From early November through to mid-December, we are also running a series of seminars that provide information on the market opportunity. For more information contact your account manager or log onto www.pruadviser.co.uk.

What are the main challenges you faced when introducing this product into the marketplace and how have you met them?

As a new entrant to this market the biggest challenge we faced was in building our credibility, while also developing new and lasting relationships with advisers.

We have gone a long way to achieving this: firstly, by developing an innovative product that more closely meets the needs of clients and that advisers can sell; secondly, by underpinning this with excellent customer service; and thirdly, by putting focus and resource into the development of our account management structure, ensuring that lifetime mortgage advisers have the support and help they need to build their businesses.

Our nomination for three awards at the annual Equity Release Awards suggests that this has been a success.

Where can advisers go to get more information on this product?

Advisers can get more information on our product and services by contacting their account manager, by calling our dedicated adviser line on 0800 731 5544 or by visiting www.pruadviser.co.uk.

Keith Haggart
Director of Lifetime Mortgage
Prudential