Concerns have been raised by the equity release industry that regulation by the Financial Services Authority will not be enough. Currently, the Safe Home Income Plans (SHIP) voluntary organisation lays down a code of conduct to which all members must abide. The code includes important measures such as no-negative equity guarantees, involving an independent solicitor and guaranteeing a right of tenure for life.
FSA regulation does aim to protect the consumer but some of these guarantees are not included.
Our Views
Until FSA regulation commences on 31 October 2004 SHIP is the only real protection consumers have. What the FSA is bringing in does not go as far as SHIP does in some areas, which could mean future consumer detriment, the exact opposite of why the FSA was brought in to regulate in the first place. Some in the industry believe that after regulation commences some equity release providers new to the market may not bother becoming members of SHIP. This could easily happen as there is no compulsion for them to do so. However, if they have their customers best interest at heart they should join. The work done by SHIP is excellent and, if combined correctly with FSA regulation, consumers will be exceptionally well protected.