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Have your say on reversion regulation

Good news last week for the industry with Norwich Union saying that it hopes to have a drawdown lifetime mortgage available in the next month. This is an indication that NU is still committed to this market. We wait to see where the pricing of the product will sit alongside competitors.

The events of the week centred around home reversion regulation with many of the industry’s leaders taking part in discussions to ensure there is clear and consistent feedback to consultation documents from the Treasury and the Financial Services Authority.

Remember that the deadline for responses to the Treasury is June 23 and to the FSA July 21. It is anticipated that regulation will be in place next spring.

In looking at the consultation documents, the greatest impact on the home reversion market will be felt by those who are not providing home reversions or advising on them in the context of a regulated environment – for example, at the same time as offering either lifetime mortgages or advising on them.

Issues centre on which activ-ities will be captured within the regulations and in particular the implications for existing providers, should they choose not to offer home reversion products in a regulated environment.

One of the key issues will involve home reversions arranged prior to regulation. The proposed regime will look to capture some changes to contracts which may be classed as regulated activities, such as clients selling further stakes in their properties.

Providers that choose not to offer home reversions after regulation may well find their activities when it comes to existing contracts are limited.

The implication for advisers offering lifetime mortgages but not home reversions is that they will be required to provide greater clarity to consumers, highlighting that advice is limited to lifetime deals only. They will also have to provide stronger evidence to prove home reversion would not have been more suitable.

The positive for the industry is that providers and advisers are taking these consultations seriously. With deadlines looming, make sure that you take the opportunity to help shape this market.

Dean Mirfin is business development director at Key Retirement Solutions

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