Home reversion to escape regulation

Home reversion schemes will not join mortgage-based equity release products under FSA regulation, the Treasury announced today.

The Treasury does not consider that is has the power to give the FSA responsibility for regulating home reversion products, which are equity release schemes that involve the sale of the property by the &#39borrower&#39 to the person providing the finance.

HMT 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 said warned that the two types of scheme were interchangeable, and that the risks were greater with home reversion.