Equity release sector leads from the front
Share
These days it’s rare to read articles about equity release which talk about the flawed schemes that existed in the late 1980s.
Much credit needs to be given to trade body Safe Home Income Plans for embedding no negative equity guarantees into all plans that adhere to its code.
It’s almost taken for granted that these plans give applicants the freedom to move home in the future. The independent solicitor certificate has also done much to protect clients and brokers.
Not all countries can boast this level of protection however. Australia, while following many of the SHIP standards via its Senior Australians Equity Release Association of Lenders, has a more fragmented market where nearly half of the lenders do not subscribe to the standards.
The result, either directly or indirectly, is a new piece of legislation that is going through the Australian parliament now. This is to amend consumer credit laws to enhance disclosure and most importantly to insist on a no negative equity guarantee.
How many sectors in this country can boast that the UK has raised product standards for consumer protection before being forced to do so by legislation?
SHIP’s insistence on advised sales from qualified advisers in 2006 may be another example of the industry leading from the front.
Here’s hoping that the Financial Services Authority formalises this in its Mortgage Market Review proposals.
If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat
Readers' comments (1)
Kevin Conlon | 10 Oct 2011 10:19 pm
Hi Jon,
I add my congratulations to your tribute to Andrea Rozario and her team at SHIP.
Having just returned to Australia from the UK where I caught up with Andrea to compare notes on our Equity Release markets, my first task was to welcome the new Australian regulations.
This is where you might have missed an important point, Jon.
In fact the vast majority of active Equity Release providers in Australia are members of the peak trade body, SEQUAL. As the Chief Executive of SEQUAL, I am proud of our contribution towards an ethical and efficient market in this country.
We have worked closely with Government to ensure that the market was not burdened with unnecessary regulation and are pleased that SEQUAL's self-regulatory initiatives have now been uplifted into legislation.
You might be interested to know what the Australian Assistant Treasurer recently had to say...
"Development of the reverse mortgage reforms has been assisted by the mature and constructive approach taken by the reverse mortgage industry and its peak body, SEQUAL," Mr Shorten said.
"The reverse mortgage industry anticipated the need for consumer protections and acted by introducing a robust industry code – some aspects of which are reflected in our legislation."
Again, my best wishes to SHIP Members. It is important that well designed equity release products are available to those wishing to live the life they choose in retirement.
Kevin Conlon M.App.Fin
Chief Executive, SEQUAL
Unsuitable or offensive? Report this comment