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L&G axes Rock deal to quit equity release

Legal & General is pulling out of the equity-release market by ending its white-labelling arrangement with Northern Rock.

The firm says it no longer wants the product in its mortgage range because of confusion over the product and Northern Rock&#39s own product.

L&G has been white-labelling the equity-release product through Northern Rock-owned L&G Bank for the past 20 months.

It says it does not intend to re-enter the equity-release market.

Mortgage brokers say the nature of the two brands has been causing confusion.

L&G says Northern Rock&#39s standard equity-release product can be accessed through the L&G mortgage club.

Norwich Union director of personal finance Mark Kelly says despite the withdrawal by L&G, he expects a number of new players to come into the equity-release market following M-Day.

Hamptons International Mortgages broker Jonathan Cornell says: “I suspect that L&G was anxious of equity release being the next endowment situation. Equity release is a good product but it has the potential to be the next big problem if not dealt with properly. The fact that HBOS has not gone into it says a lot.”

London & Country head of equity release David McGrath says: “I do not think there was much choice for L&G as it was too confusing with a near duplication with Northern Rock&#39s equity-release product. It got to the point where Northern Rock was being beaten by its own brand.”

New Work and Pensions Secretary Alan Johnson has surprised the industry by asking life offices for pension proposals and there is a feeling that change could be on the way

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