Equity release industry body SHIP, which represents 90% of the equity release industry, has submitted a strong paper in response to the Treasury consultation on home reversion schemes, urging the government to regulate them.
SHIP believes regulation of home reversion schemes is imperative to ensure that consumers benefit from a fair choice of products in this fast growing marketplace and to protect consumers against the risk of unauthorised providers entering the market. The government plans to regulate lifetime mortgages from October, yet home reversion plans are still under consideration.
SHIP is concerned that the introduction of regulation on lifetime mortgages in October, and not home reversions, will lead to a two-tier system. This is turn may result in consumer confusion, and may lead to brokers favouring lifetime mortgages over home reversions due to regulatory reasons and will ultimately reduce overall development of the equity release market.
Further to this, SHIP is pre-empting a move by the government to regulate the industry and will introduce its own tough code of practice to ensure best possible consumer protection continues. In conjunction with this, SHIP is reviewing its rules and its role in enforcing compliance and a toughened complaints procedure.
Central to the review, SHIP is also considering whether to bring in a new membership category to cover intermediaries. SHIP expects to make an announcement on these changes later in the spring.
Jon King, chairman of SHIP, says: “SHIP welcomes the Treasury's decision to engage in a formal consultation process regarding the regulation of home reversion plans. It sees this as a necessary step towards the eventual introduction of formal regulation.
“Over the last 13 years SHIP has always advocated government regulation of equity release. In the interest of consumers, SHIP urges the government to regulate home reversion schemes alongside lifetime mortgages to create a level playing field in the equity release market.
“Regardless of the government's actions, SHIP intends to maintain its position as the industry standard bearer that consumers can trust, and will be announcing a tough code of practice for reversion schemes very shortly.”