John Howard, chairman of the Financial Services Consumer Panel said:
"We have had numerous discussions with the FSA about home reversions, and still continue to be concerned about the level of protection for consumers:
· Firstly, the new FSA rules will allow these products to be sold without advice, when this reduces the existing protection under trade body* guidelines which said that advice should always be given;
· Secondly, there will be one valuation of the property for both the consumer and the firm purchasing part of their property, so consumers may not get the best price for the portion that they are selling.
· Thirdly, the Treasury has imposed a twenty year limit on home reversion schemes to differentiate home reversions from other loans – and yet this will mean that if a consumer aged around 60 takes out a home reversion, they could face eviction from their home when they are around 80, when the investor would be able to demand the return on their capital investment, with inevitable consumer worry and detriment.
We have repeatedly stated our concerns to the FSA – these are complicated products, purchased by elderly people who are often less able to look after themselves, and which will need to be fully explained to consumers. We do not think that the FSA's new rules go far enough to protect consumers."
