Financial Conduct Authority head, Martin Wheatley, says equity release has a role in funding long-term care and argues that people may have moved on from the idea of leaving their home to their children. Speaking at an Age UK conference in London last week, Wheatley said equity release represents “one part of the solution” to the problems faced by an ageing society.
He said: “There is clearly a huge amount of capital built up in homes and we do not all need to leave large legacies to children who have already grown up and have a home themselves.“We may have moved beyond the age of leaving a home intact and debt-free to the next generation. The challenge now is how people can utilise the value that has been built up to pay for what is becoming an increasing problem of caring for an ever-longer old age.”
Association of British Insurers Director General, Otto Thoresen, said equity release is a big part of the solution to long-term care funding and could play a role as the industry looks to build on the care funding proposals outlined by Andrew Dilnot last July. He says: “We need to start thinking about how we can begin raising the profile of equity release in a positive way.” But Joseph Rowntree Foundation chief executive, Julia Unwin, warned equity release cannot cover the increasing levels of retiree debt. She said: “The Treasury has its eyes on equity release to pay for people’s old age, to pay for care, provide insurance and possibly pay off their children’s student loans. Let us remember that we cannot use equity that many times. The fact that a very high number of people are entering retirement with mortgages seems to be a wake-up call that people are leaving employment with quite a high level of debt. We should not overstate what that equity is there for.”