Opportunities in the Equity Release Market

1. Opportunities in the Equity Release Market A product provider’s view Equity Release Roadshow, Glasgow 22nd April 2008 Simon Cocker Head of Business Development Dunfermline Building Society

2. There has never been a better time to enter into the equity release market • From a provider’s perspective • From an advisor’s standpoint • And critically from a customer point of view

3. Why – a provider’s perspective • Quality of customer base • Growing demand (aging population) • Increasing demand from own customer base • Good returns available vs residential mortgage market • Credibility

4. Why – an advisor’s standpoint • Increasing importance when conducting retirement planning advice • Increasing demand • Continuation in pension under provision, endowment shortfalls • House is major asset – in last 10 years • Changing attitudes • Additional/replacement income stream • Improved reputational risk

5. Why – a customer’s point of view • Change in attitudes • To their house as their “castle” • To maintain lifestyle • Retire to live not await death • Viable option to downsizing • Drawdown is becoming increasingly attractive • Improving reputation (chattering classes & SHIP increasing profile and NNEG) and regulation • Liquidity crises may boost this • Get money now before house falls in value • Need to help next generation(s) onto housing ladder • More recognised names entering the market

6. But what about the risks • Mis–selling key risk for perceived vulnerable groups • FSA mystery shopper exercise flushed out widespread poor practice • Customers don’t want “dabblers” in the market • Quality and quantity of introducers is key

7. We all have a role in mitigating these if the product is right for the customer • Part of holistic retirement planning – a considered viable option • Follow SHIP guidelines • Involve the whole family • Recommend a quality provider • Conduct regular reviews • Competition from providers will increase value and choice

8. So why has DBS sought to enter the market as both a provider and distributor • Demand from our own member base • Desire to have long term mortgage assets • Strong fit with brand, especially in Scotland • Reputational risk easing • Fit with High net worth goal • Opportunity to help shape and grow market • Chance to offer something slightly different!

9. How do we set our pricing and manage the long term risks • Crossover risk (both house price & mortality) • Redemption risk • Mis-selling risk

10. Which type of customers have a potential need for Equity Release? • Lifestyle enhancers • Pension short fallers (needing income to top up) • Endowment short fallers • Consolidators • High net worth’s • IHT planners • Divorcees • Plus new types?

11. There has never been a better time to enter into the equity release market • From a provider’s perspective • From an advisor’s standpoint • And critically from a customer point of view

12. The key to growing the Equity Release market is confidence And we all have a key role in making this happen! Thank you