How vulnerable consumers choose and buy equity release products
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Mundy, Julia 
ORCID: 0000-0001-7970-3507, McGee, Francis and Collard, Sharon
(2022)
How vulnerable consumers choose and buy equity release products.
Project Report.
Financial Services Consumer Panel (FSCP), London.
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PDF (Published report)
37530_MUNDY_How_vulnerable_consumers.pdf - Published Version Download (277kB) | Preview |
Abstract
The Financial Services Consumer Panel (the Panel) undertook research to understand how consumers choose and buy equity release (ER) products to meet their later life needs. Enhancements in both regulation, such as the introduction of mandatory advice, and industry standards mean that the ER market now successfully serves the needs of many consumers. However, for several reasons, ER products warrant a closer look. They represent a substantial long-term and open-ended commitment, have important features that may be unfamiliar to consumers, and require the consumer to consider a variety of factors that could arise during their retirement. ER products can be difficult or costly to undo, and impact in a unique way, through the erosion of housing equity, on family and dependents as well as the purchaser (see Appendix 1 for an overview of the different product options). As with pensions, the high average transaction value (approximately £104K for ER products) means that poor outcomes are potentially catastrophic for consumers as well as costly for wider society in terms of welfare payments and other support. The Panel’s work indicates that the prevailing guidance, sales and advice processes may exacerbate some of the risks faced by consumers of ER. The research findings suggest that consumers who purchase from a position of vulnerability may struggle to consider the long-term implications of their choice. Decisions made by the participants in the research tended to be informed by marketing and conversations with friends and family rather than through engagement with a professional adviser. The qualitative research commissioned by the Panel indicates that consumers who purchase from a position of vulnerability may be exposed to the risk of poor experiences or outcomes in a variety of situations. These situations can occur independently or in combination and arise when:
• consumers purchase from a position of necessity or urgency, so are less likely to shop around for a better product, explore non-ER options, or seek independent advice or alternative views
• consumers are unable to ask the right questions about a complex long-term product with which they have no prior experience
• consumers are susceptible to marketing and inclined to seek corroboration through informal channels (adviser contacts / friends or word of mouth)
• consumers are vulnerable to sales techniques and the advice provided by sales advisers, particularly when received in the family home
| Item Type: | Monograph (Project Report) |
|---|---|
| Uncontrolled Keywords: | equity release; financial services industry |
| Subjects: | B Philosophy. Psychology. Religion > BF Psychology H Social Sciences > HF Commerce H Social Sciences > HG Finance |
| Faculty / School / Research Centre / Research Group: | Faculty of Business Faculty of Business > Department of Accounting & Finance |
| Related URLs: | |
| Last Modified: | 22 Sep 2022 11:48 |
| URI: | http://gala.gre.ac.uk/id/eprint/37530 |
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