I once had a telephone conversation with someone for almost three minutes before realising they weren’t talking to me at all.
I was on the hard shoulder of the A303, trying to summon help via one of those orange emergency phones placed every mile along our motorways.
It turned out that both me and another hapless motorist on the same stretch of road must have tried calling for help at precisely the same moment because we got a crossed line.
For nearly three minutes, I had a perfectly-timed if somewhat bizarre and frustrating ‘conversation’ with someone in a traffic control centre before realising what was going on.
I was reminded of this curious incident from my past while looking through the findings of some research more 2 life carried out with consumers on attitudes to debt and lending in retirement.
We asked more than 1,000 people aged 45 and over about their current debt situation and also their appetite for further lending, especially once they retire.
What emerged from this research was fascinating in terms of shifting generational attitudes towards debt, in later life but there appears to be a frustrating “crossed line” when it comes to the retirement lending solutions clients have in mind.
A quarter of those we asked said they expected to have to borrow money in retirement, or weren’t sure if they could avoid it.
More than half of over-65s (58%) felt there should be special borrowing products for retired people, and nearly one-third of over-65s (28%) consider their home as part of their retirement assets.
But – and it’s a worrying ‘but’ for this industry – nearly one quarter (24%) of over-65s would not consider equity release, and nearly half (48%) of those who would not said it was because they mistrust the products.
So how is this happening? Where is the disconnect between a consumer base eager to explore lending options in retirement – indeed calling for “special borrowing products” designed just for them – and a deeply held mistrust of the very lending products that could help them to a more secure, financially stable retirement?
Just like that crossed line on the A303, the communication link between the consumer seeking help and an industry offering solutions seems to be broken, or at least not working as well as it could.
The mis-selling scandals of the early days of Home Income Plans are long behind us (eradicated largely thanks to work of SHIP and now the Equity Release Council), but the scepticism of the market remains.
The equity release market was worth £1.4bn in 2014 – a record year – and all the indicators point to another great year ahead with some in the industry predicting sales approaching £2bn, perhaps more.
In comparison to the residential mortgage market, of course, it is tiny.
Indeed, when you consider the size of the untapped wealth locked up in homes owned outright by those aged 65 and above in the UK – almost £1trn – the equity release market has a long way to go before it can be considered a mainstream solution in the UK retirement sphere.
Education and information
However, there is plenty of room for optimism.
The recent pension reforms introduced in April will surely give a boost to equity release, especially among clients eager to explore the most tax efficient way of managing all of their assets in retirement.
With the average client retiring in this country on a pension pot valued at about £30,000 but likely owning outright an asset worth almost ten times that amount, the potential advantages of equity release become obvious.
The key to success surely is for this industry to keep doing all it can to help educate and inform consumers about the benefits of equity release solutions, to reassure them about the safety features built into these products (such as the no negative equity guarantee) and above all to keep innovating so that even more retirement lending solutions can be offered to meet their needs.
And in case you were wondering what happened to me all those years ago, stuck on the A303…
I managed to get through to the control centre, for real this time – to the very same lady in fact – by hanging up the phone and trying again, and I was soon on my way.
Which just goes to show that, once the lines of communication are truly open between those in need of help and those offering the solution, the outcome is better for all.
Stuart Wilson is marketing director at more 2 life