Actuaries take centre stage in equity release mortgage market
Actuaries are using their skillset well beyond traditional areas such as valuation and capital when working in the equity release mortgage market, according to the latest research.
The IFoA’s thematic review report Equity release: actuaries working in propositions and pricing reveals that organisations offering equity release products also view pricing and propositions as technical actuarial work. While actuaries are not as directly involved in customer relations as other equity release professionals, balancing consumer outcomes with commercial considerations is important in their work
The study acknowledges the potential for legacy issues around equity release products, especially given customers’ “older and sometimes more vulnerable demographic” and the considerable consumer, financial media and regulatory interest in fairness.
The review says that while actuaries may be more involved in non-customer-facing roles, they must still consider professional and organisational risk. In particular, they must understand the Prudential Regulation Authority and the Financial Conduct Authority’s regulatory focus and equity release market requirements.
The study suggests that actuaries may face increased workloads as the market grows, having to consider long-term risks and potential outcomes on behalf of both those who are looking to take equity release and the firms that offer it.
“The long-term nature of equity release products, alongside considerations such as longevity, long-term care needs and pricing options, means the actuarial skillset is well positioned to help deliver a suitable product for both customers and firms,” said report author and IFoA review actuary Alan Marshall. “It is important that equity release products are designed, priced and sold in a way that inspires confidence in the market.