A report by the regulator earlier in the year revealed concerns over ‘intermediaries who write occasional business in this area without developing necessary systems and controls, knowledge and skills to give the quality of advice FSA standards require.’
Duncan Young, managing director at Retirement Plus, expressed his disappointment that the market, and regulator, had failed to implement changes to the market in the run-up to the FSA regulation of home reversion plans in 2007. He said: “Come Spring 2007, when the market should be regulated, products that are equity release will still be sold unregulated and the number of players in the market will have shrunk significantly. I don’t know what the intention of the government was, but this does seem a strange outcome. One has to trust that the regulation of the surviving players makes all the effort worthwhile and that consumers benefit accordingly.”
Young added: “The pity is that the Treasury did not set up its stall to provide a system which embraced the total market, with sufficient flexibility within that, to cater for any future developments.”
Peter Wright, financial adviser at CBK, said current market uncertainty made it hard to advise in the area. He said: “Insufficiency of regulation in the equity release market is a worry. The whole market should be regulated, but the fact that reversionary products do not fall under the definition of mortgage products is wrong.
He added: “However I cannot see why the number of lenders will shrink. Instead, it is more likely that the number of advisers will fall.”.
