Having been a keen history student, I like to think I understand the importance of looking at the past as a guide to how we should move forward.
The recent news stories around the judicial review into the long-standing dispute between Sipp provider Berkeley Burke and the Financial Ombudsman Service have read like a soap opera.
We have watched with interest to see if greedy investors wishing for great returns from obscure investments such as plots of agricultural land in Cambodia should get their money back. Whatever happened to caveat emptor?
If the decision goes against Berkeley Burke, and it is deemed the provider’s fault for making this obscure investment for its client, there will be a move towards products being regulated.
Before pension freedoms introduced an “anything goes” mentality with retirement money, we had a one-page list of allowable Sipp investments enshrined as a statutory instrument in Memorandum 101. It was as clear as day. Now standard and non-standard investments in Sipps are causing chaos. We should go back to a statutory list.
Another thing the pension freedoms have done is push equity release to an all-time high.
According to the Equity Release Council, £1.02bn was released in Q3, up £193m, or 24 per cent, on the same period a year previous. All this money released under just one product type.
Back in the day, we had the home reversion scheme and lifetime home income plans.
With a home reversion scheme, you would sell all or part of your property at less than its market value in return for a tax-free lump sum, a regular income, or both, but stay on as a tenant, paying no rent.
They received bad press at the time, with criticisms including the fact there was no sharing of rising house prices. But with UK house prices rising at their lowest level for five years, why not revisit the idea and make it better?
Why not look to offer regulated, modern home reversion plans?
There are many elderly people with no family sitting in expensive homes who could do with lump sums obtained through such a scheme.
There is another product the elderly should be offered that no longer exists in the UK – that is, a deferred annuity.
We can argue for hours if 4 per cent is the right drawdown withdrawal rate but experience in Australia tells us thousands of pensioners run out of money in their later years.
Deferred annuities are offered in the United States and should be here for those that do not want to, or cannot, draw down equity from their home.
So come on product development teams. I cannot recall any innovative product development that has sold for years.
As Winston Churchill once said, “history will be kind to me for I intend to write it”. Please let that be inspiration.
Kim North is managing director at Technology & Technical