1. Andrew Strange Senior Policy Analyst AMI & EQUITY RELEASE ROAD SHOWS APRIL 2008 Regulation, regulation, regulation.

2. AGENDA The mortgage market and demand for professional advice Perceptions of equity release The equity released market Regulation: UK Europe Key regulatory guidance and tips

3. THE MORTGAGE MARKET The Mortgage Market: –11m borrowers –>6m transactions in 3 years –>70% distributed through intermediaries Clear demand for professional advice

4. 5.7m mortgage sales in PSD 92% of intermediary sales “advised” 40% of Direct sales had advice Product Sales Data: 72% of tracker products sold through intermediaries 86% of Standard Variable Rates sold through lenders. Cuts in BBR but not SVR? Clear benefit to receiving professional advice FSA FIGURES The UK residential mortgage market Source: FSA, PSD 1 st April 2005 to 30 th September 2007

5. PERCEPTION OF EQUITY RELEASE Areas to expand: AMI Census Results

6. EQUITY RELEASE MARKET 80% of Lifetime Mortgages sold via intermediaries 2005: £1,168m 2006: £1,213m 2007: £1,260m If anything, the more complex the product the greater the need for advice CML/SHIP Research

7. Equity Release Different consumer ‘profiles’:  Those in need of income  Those who desire extra income  HNW – tax mitigation  A broad range of potential clients  Mortgage Advice?  Financial Planning?

8. Equity Release Comparative Strength of Market Lack of credit risk Innovative products and providers Net housing equity Increasing public debate and interest – pension reform, public social agenda Strong representation – AMI/AIFA, SHIP

9. REGULATION - UK Mortgage Effectiveness Review & NewMCOB? Thematic mystery shopping - 2005/6 Sale and Leaseback VAT TCF

10. REGULATION - UK Mortgage Effectiveness Review Part II of the post-implementation review of MCOB Forms part of the broad review of MCOB Move to principles based regulation Assesses five outcomes Lifetime mortgages fair well!

11. Effectiveness Review - Outcomes 1: Consumers shop around 2: Consumers don’t tend to understand the advice and information-only distinction 3: Consumers understand risks “In the quantitative research, 96% of the respondents who had spoken to a professional adviser did not reject their adviser’s recommendation and most purchased the recommended product.”

12. REGULATION - UK Thematic work of 2005/6 is complete. Sale and Leaseback – a threat? VAT disparity of home reversions and lifetime mortgages.

13. REGULATION - EUROPE Mortgage Credit White Paper –APR –KFI –Early repayment –Access to credit data Lessons to learn? Or opportunities to teach?

14. Key Regulatory Actions: Perception as high risk Underlying strength of regulation Suitability Fact-finding Interaction with State Benefits Dabblers TCF

15. In terms of gathering Management Information (MI) to evidence TCF, how prepared is your firm?

16. TCF REGIME At last! We now know the answers to the question! Management information must be collected and used Some how MI must be tied into the 6 consumer outcomes External Data must be collected and used on an ad hoc basis (FSA newsletters, media, AMI factsheets etc) All members of staff must be able to talk a supervisor about the firms awareness of TCF And finally - firms must seek external feedback on their MI TOP TIPS! You will ‘fail’ without these

17. TCF REGIME External Feedback: –Age profile –Loan-to-value –Lump-sum verses Drawdown Ask and document! Even if you don’t actually get!

18. On the front foot The champion of the profession Regulatory campaigning Political lobbying European lobbying Media Consumerists Reputation Service standards Events and help Conferences Seminars Helpline Fact sheets Get involved, get elected! OUR WORK With your help

19. Association of Mortgage Intermediaries Our website: WWW.A-M-I.ORG.UK