SHIP has welcomed the news that the government has taken another step towards the introduction of formal regulation for home reversion schemes. The third reading of the Bill has been completed and means Royal Assent could possibly be granted by the end of the year, enabling an acceleration of the consultation process. The final consultation process should therefore be completed some point in the third quarter 2006 with formal regulation in place early 2007.
As the leading authoritative voice for the equity release, representing over 90 per cent of the market by volume, SHIP has been campaigning for two years to bring the sale of home reversions under the regulation of the FSA. The government announced in 2003 their intention to regulate the sale of lifetime mortgages, but at that time, intended to exclude home reversions from this. SHIP felt this would result in an uneven market and limit consumer choice and professional advisers would not be able to make a fair comparison between home reversions and lifetime mortgages.
To bridge the gap ahead of formal regulation, SHIP has taken steps to enhance consumer protection in a way that mirrors lifetime mortgage requirements. These include the establishment of an independent Complaints Board, able to issue fines of up to £25,000 per case and a Product Confirmation letter designed to give peace of mind to the consumer. The new regulatory regime will mean an end to the two tier reversion market where SHIP members were held to certain product and selling standards because of the SHIP code but non-members were under no such obligation.
Jon King, chairman of SHIP commented: “We are delighted at the progress being made towards bringing home reversions under the regulatory umbrella of the FSA. SHIP has consistently argued for home reversions to be put on the same footing as lifetime mortgages and we are pleased to have been able to contribute to the shaping of the new regulation. Recent figures from SHIP show home reversions business growing strongly and so the need to raise standards of consumer protection is greater than ever.”
