Calls to regulate home reversions gather pace
With the equity release market currently undergoing a mystery shopping exercise by the Financial Services Authority (FSA), the Treasury has begun its consultation of home reversion and home purchase plans.
The consultation, with a deadline of June 23 to post feedback, details a set of questions, including assessing the Treasury’s approach to activities to be excluded from the home reversion and home purchase pack regulation, and judging if firms agree with the market definitions of home purchase plan and of the plan provider.
Darren Carter, sales and marketing director at Norwich Union, personal finance, welcomed the launch of a consultation process. He said: “We lobbied the Treasury back in 2002 on this issue and called on it to introduce full regulation of both lifetime mortgages and home reversion plans. We believe that regulation will further increase consumer and adviser confidence in the equity release market, but currently there’s a two-tier regulatory framework in place; lifetime mortgages are regulated and home reversion plans are not. Until this is corrected there remains a gap in regulation in this market and we want to see it closed as quickly as possible. We will be submitting a formal response to the Treasury on the consultation paper by the June 23 deadline.”
Alan Lakey, senior partner at Highclere Financial Services, backed Norwich Union’s calls for greater regulation of the home reversion plan sector. He said: “In the consumer-driven market we are currently in, it seems an anomaly that home reversions are not covered by regulation.”