View more on these topics

Home reversion plan omission warning

Brokers have warned that the Treasury&#39s decision to leave home reversion schemes out of FSA regulation could cause consumer detriment and confusion.

The Treasury does not consider that is has the power to give the FSA responsibility for regulating home reversion products – a type of equity release scheme that involves the sale of the property by the &#39borrower&#39 to the person providing the finance.

The Treasury says this is because they are not financial services products but are “sale and purchase arrangements in relation to real property”. Mortgage-based equity release is already covered under FSA regulation.

Respondents to the Treasury consultation paper warned that the two types of scheme were interchangeable and that the risks were greater with home reversion.

And Patrick Bunton, head of operations and compliance at London & Country, says: “We believe the equity release market is going to grow in significance and complexity in the future. The exclusion of one of the major types of product in this market could lead to confusion.”

Ray Boulger, senior technical manager at Charcol, says: “A lot of less competent mortgage brokers who do not become qualified will move into home reversion. This is quite a complicated product and a home equity release product is usually the better solution for most people. Selling inappropriate home reversion schemes could cause serious consumer detriment because they cannot get out of it having sold all or part of their property.”

But Mark King, managing director of London-based Crown Equity Release, says: “I am very pleased that home reversion is not being regulated. There is no risk because the customer must obtain a letter from a solicitor, who is in charge of whether they should proceed or not with these plans. But people must choose their own solicitor, not have one appointed for them.”


30 firms to support

30 major life offices, portals, fund-supermarkets and technology companies have committed to support the second major event, to be held in London on September 5. Five new exhibitors – IntelliFlo, Easylink, Morningstar and Canon UK – will be are using the event as a platform for their launch into the IFA market. Over 450 […]

VirginOne expands Horwich team

VirginOne has announced plans to expand its intermediary operation in Horwich, Lancashire. VirginOne already employs over sixty people to look after intermediary business, both out in the field and at its Norwich headquarters in Norfolk. Plans for growth include at least 20 more people at the new contact centre in the North West. Scott Mowbray, […]

FSA seeks to define independence in the mortgage market

The FSA is consulting on whether it should place requirements on firms in the mortgage market who choose to call themselves &#39independent&#39 and, if so, whether this should apply to both advised and non-advised sales. It also considers whether firms should adopt a different status in relation to different regulated products, for example, being independent […]

Advice definition is final, says Treasury

The definition of advice in the consultation draft of the Regulated Activities Order is final, says the Treasury. Strategic or generic advice will not be regulated following the format for investment advice, and only advice on the merits of a particular mortgage will be captured. The Treasury registers the concerns of respondents who sought greater […]


News and expert analysis straight to your inbox

Sign up