Following considerable pressure from the financial services industry, the Treasury has agreed to look at regulating Home Reversion Schemes.
Until now, these schemes had escaped the regulation net, even though mortgages, general insurance and other equity release schemes are to become regulated in 2004 and 2005.
Treasury Chief Secretary Paul Boateng said that when regulation is considered the major influences will be consumer protection and market efficiency. However, he also commented that after discussions with the industry he had found no evidence of consumer detriment. The industry is now concerned that not enough emphasis will be put on the Treasury's review to protect consumers.
In a bid to make the home reversion scheme market more appealing to consumers, Norwich Union have suggested voluntary regulation throughout the industry, until any decision is made by the Treasury.
Our View
If the Treasury do not find any problems with home reversion schemes that could affect consumers, they are unlikely to introduce yet more regulation. We are sure their approach will be the 'if it isn't broken, don't fix it' one.
What the Treasury need to understand is that in a market where mortgages and general insurance are regulated and home reversions are not, this will influence the more unscrupulous advisers just wanting to make a fast buck. This could lead to mis selling and definite consumer detriment. We believe that the Treasury needs to look at the equity release, mortgage and home reversion markets as a whole when it comes to regulation.
Learn more about equity release and home reversion schemes in Mortgage Crazy.com.
Download a copy of our free fact sheet on equity release in the registered users client centre.