The Treasury must move to introduce regulation of home reversion schemes because its failure to do so is continuing to cause unease in the mortgage industry, according to the Consumers' Association.
Senior policy adviser Laurence Baxter expressed concern over the issue of equity release in a speech at last week's mortgage lending strategy summit.
The Treasury is maintaining its decision that home reversion, which currently makes up only 10 per cent of the equity release market, has yielded too few cases of detriment to provide sufficient motivation for regulation.
Baxter said one of the problems is a lack of clarification over whether home reversion is an investment or an insurance product, making it difficult for the Treasury to make up its mind.
Specialist intermediary Key Retirement Solutions managing director Colin Taylor believes the Treasury will eventually opt for regulation but says it might take until 2007 until the market sees the effect of such a decision.
Baxter says: “The market is trying to get our heads round what it has created. For example, let's say I was selling a painting I own to someone in exchange for something. Should that be regulated?” Taylor says: “Everyone in the industry wants a level playing field. Hopefully, the Treasury will respond to this.”
A Treasury spokesman says: “We realise there is a lot of interest in this rapidly growing market. A statement will be made in the next few weeks.”