SHIP's response to the the Treasury's document publised in July and entitled Defining Home Reversions supports the wideninng of regulation to cover home reversions and bring them into line with lifetime mortages.
In terms of consumer protection, SHIP says that an increasing focus on regulation of marketing and sale of products does not impact on the regulation of product and design.
It is calling for the regulation of home reversions to be as short as possible and wants the Treasury to give a firm date on when it will be introduced.
It also warns that the cost of regulation should not drive some of the smaller players into unregulated fringes of the market.
In response to specific questions raised by the Treasury, SHIP says Ijara home finance arrangements should not fall within the scope of the Financial Services and Markets Act.
Finally it wants the definition of home reversion to be broad to ensure protection is provided to all consumers.
Norwich Union also gave its response to the Treasury's consultation on regulation of home reversion plans. Although the firm doesn't yet have a home reversion product, it is looking at the various problems it would have to overcome should it decide to provide a regulated home reversion product.
Mark Kelly, director of Norwich Union Personal Finance, says: “Norwich Union has lobbied for reversion plans to be regulated because it is
important to create a level playing field between home reversion plans and lifetime mortgages. Now the decision has been made to regulate home
reversion plans, it would help the industry and benefit customers if this could progress as quickly as possible.
“It is essential that there are no loopholes whereby a product that fulfils the same purpose could be designed to avoid regulation and the protection this brings to customers, and it is important that all products that could be loosely described as equity release plans are included within the scope of regulation. The essential features of a home reversion plan are that the customer exchanges a percentage interest in their home for a lump sum and/or income.
“We believe that all plans should be regulated, regardless of the percentage reverted to the provider, and the right to remain in the property until the customer dies or moves home should be fundamental to all plans.”