The Treasury has confirmed that it is planning to introduce the regulation of Home Reversion schemes and have them come within the remit of the Financial Services Authority.
Currently, Mortgages and Equity Release Schemes (using mortgage type interest arrangements) such as Home Income Plans and Lifetime Mortgages are not regulated by the Financial Services Authority. This means that for many people they are not aware that they do not have any real protection from "wayward" lenders or advisers.
Mortgages are due to become regulated on 31 October 2004. However, a special type of Equity release scheme called Home Reversion where a pensioner technically sells part of their home is not a mortgage and therefore will not be regulated.
Our view
The move by the Treasury is a very welcome one. Mortgages as well as general insurance (house insurance, motor insurance etc) are long overdue having a formalised regulation such as has been in place for Life Insurance, Pensions and Investments for nearly 30 years!
To have missed Home Reversion schemes was a little worrying. All they have to do now is regulate "finance" loans etc and we can start to build a safer financial services market.