July/August 2022 Reverse Mortgage Magazine

early stages of developing their businesses to ensure that their market propositions are in line with the EPPARG 10 standards,” Kyle says. EPPARG and the U.K.’s Equity Release Council are the European counterparts to NRMLA in that they advocate for equity release products and promote high standards for the industry. The organizations form the Global Equity Release Roundtable that has been meeting periodically over the past few years. Kyle says the roundtable brings together “leading international players from around the world to understand how different markets are evolving and to exchange ideas and best practices.” A new roundtable meeting likely will be scheduled in 2023, says Christopher Mayer, a NRMLA board member and CEO of Longbridge Financial, based in New Jersey. Funding Opportunities Much cross-border discussion has centered on funding opportunities, especially as it might pertain to U.S. companies finding opportunities to invest in European markets, say Kyle and Ben Grainger, who leads the EY investment advisory team in London. While it is too early to discuss details, Grainger says, he has been working with a range of companies reviewing international equity release investments, including a U.S. company that is considering investing in equity release products in the U.K. “The majority of U.K. equity release mortgages are funded by U.K. insurance companies, which means products are limited by insurance prudential regulation,” Grainger says. “There is a key competitive advantage for non-U.K. companies investing in U.K. equity release because they may not need to comply with the prudential regulation and could potentially introduce new products and allow for greater capital releases and more flexibility for customers.” In Europe, the U.K. is the most mature market. There is significant awareness of equity release products, with over 14 major providers, well-developed distribution networks and strong media attention, Kyle says. Grainger points out that the U.K. revenue model— with pension and insurance companies providing funding—works well, as does the model in the U.S. with the government-backed HECM. But those models are not necessarily portable to other countries. That means that obtaining access to funding is a key obstacle to growth in other countries, Kyle and Grainger say. Despite such hurdles, numerous opportunities exist for cross-border funding, he and Kyle also say. “The global investment market is looking for attractive long-term investments to back its long-term pensions and insurance liabilities,” Kyle says. “It is a natural development to see investment from the U.S. into Europe and vice versa. As the equity release market grows and matures in Europe, we are likely to see more activity in this space, as we are aware that some U.S. firms are exploring funding opportunities. Investors in this market, like any others, are looking for market opportunities, which can bring them attractive returns.” To promote further discussions, the U.K. Equity Release Council, which started 30 years ago, held an Equity Release Summit on May 12 in London. The one-day event developed from a member survey from 2019 in which 32 percent of the respondents said they wanted an opportunity to support the council’s activities, according to the website that promoted the forum. It was designed for financial advisers, attorneys, funders, policymakers, regulators and others. Marketing Efforts While television, social media and traditional media help to spread the word about equity release programs in the U.K., Grainger says, the U.K. has a strong referral-based marketing practice as well. A cottage industry has risen over opportunities to create referrals for equity release products. For example, financial planners and others can get referral fees from companies that handle equity release products, a practice that is forbidden in the U.S. “In the U.K., unlike the U.S., you are able to pay people to generate a lead for you,” Grainger says. A downside is that the referral fees can add to the costs of equity release products, Grainger also says. Equity Release continued on page 22 Ben Grainger REVERSE MORTGAGE / JULY-AUGUST 2022 21

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