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Equity-release risk is too high for Nationwide

Equity release still threatens to become a misselling scandal, according to Nationwide chief executive Philip Williamson, who is ruling out a launch of a release product by the society in the short term.

In an interview with Money Marketing, Williamson said the society has no plans to enter this sector until it can be proved to be low-risk to clients.

New players have been coming into the field, most recently Bristol & West.

Nationwide will continue to offer transparent and competitive products in the meantime, said Williamson. Its subsidiary UCB Homeloans will be looking at slight-adverse but not sub-prime mortgages.

With almost 200m worth of mortgages turned down by Nationwide every month because they do not meet the society’s criteria, Williamson believes UCB could use this opportunity to move into slight-adverse lending. A product should be available shortly.

Williamson’s concerns on equity release stem from his belief that some advisers are using equity from homes to put into other areas of investment for clients and that this may contravene fundamental guidance on the sales process.

He points out that none of the top-five lenders in the country has equity-release products at present and those that have been in this arena, such as Cheltenham & Gloucester and West Bromwich, no longer seem to be showing an interest in home-income plans.

Williamson said: “I still have major reservations on equity release. The regulator has really got to get its head round the sales process. The sales process must be solid.”


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