Yvette Cooper, Minister for Housing and Planning, said the government had concerns about a mandatory roll-out next June and that a more rigorous test process was needed.
Announcing the changes, Cooper said: “We have concluded that there would be significant risks and potential disadvantages to consumers from a mandatory ‘big bang’ introduction of full HCRs on 1 June 2007.”
This announcement has drawn mixed reaction from the financial services industry.
Eddie Goldsmith, senior partner at Goldsmith Williams, said: “The crux of HIPs was the HCR. So if these are now voluntary, why would anyone produce them? If the essential element is taken away, it will be like a house of cards.”
Firms that have set themselves up as HIP providers will be studying the implications of this decision closely as they have invested the most money.
However, Alan Dring, sales director at eConveyancer, remained upbeat. “What the government has done is confirm 1 June as the launch date. While the whole pack might now become voluntary, this announcement has removed the biggest stumbling block to their introduction. We will have to wait and see but for us, it is business as usual.”
Despite mixed reaction to the news, the industry seemed unanimous that the government would be the biggest losers.
Simon Biddle, head of marketing and communications at Infinity Mortgages, said: “Yet again the government has ‘u-turned’ on a fundamental that directly effects the financial services industry. This reeks of a decision based on politics rather than what is right for homeowners. The concept of a HIP is not necessarily dead in the water, but looks like it going under for the third time.”
