Kevin Conlon CEO -Equity Release Industry Council
For many years the reverse mortgage product was the only equity release option available in Australia and despite the recent emergence of non-debt solutions, it is the reverse mortgage that most retirees have relied on to unlock their housing wealth.
More than 40,000 Australians have a reverse mortgage and more than $4 billion of housing wealth has been unlocked in order that these retirees can choose to live the life they want in retirement.
As the chief executive of the the Equity Release Industry Council (ERIC), I have had the opportunity to closely observe the professional conduct of mortgage brokers and financial advisers working in this important sector and it continues to trouble me that despite a remarkably good track record, reverse mortgages continue to attract poorly-informed negative commentary.
Some time ago, the then Chief ombudsman of the Financial Ombudsman Scheme, Colin Neave AM noted that, “Of the 38,000 existing mortgage borrowers in Australia only five have lodged a complaint and of those complaints four were resolved through provider co-operation with no evidence of wrong doing on the part of the provider. What other industry can boast that level of consumer satisfaction”? A good question indeed!
I recently conducted a thorough review of the case work undertaken by the new consumer watchdog agency to see how things have been tracking since the Australian Financial Complaints Authority (AFCA) took over responsibility for determining the outcomes of any consumer complaints and it is good news for reverse mortgages.
Despite many more thousands of senior Australians taking out a reverse mortgage each year, the total number of consumer complaints now stands at only thirty seven with compelling evidence of continued good industry practice clearly emerging from a close examination of these cases. By my reckoning there are only six cases were the provider was determined to be at fault
It is somewhat amazing that of those six adverse determinations, four were based on the providers failure to ensure that the client obtained independent legal advice, one was based on a failure to ensure that the client obtained independent financial advice (their own lending guidelines, not a regulatory obligation) and one failed to properly document the loan.
Of course, these limited failures are important and it is good to see that the consumer protection system is working well.
The Equity Release Industry Council (ERIC) is committed to ensuring that senior Australians are able to rely on an efficient and ethical equity release market and I have witnessed, first hand, the significant and positive client outcomes that have been achieved over the past fifteen years through the appropriate use of equity release.
The track record of reverse mortgages looks good to me.
Live Long… Live well!