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Clamour grows for equity-release regulation

The FSA is being urged to regulate second-charge loans, buy to let and reversionary equity-release plans.

The results of the Money Marketing/One Account poll reveal that most of the 215 advisers questioned want to see the FSA move into these areas.

Top of the regulation wish list is equity release, with 87 per cent wanting this area regulated. Seventy per cent of advisers questioned wanted to see buy to let come under the remit of the regulator and 69 per cent wanted to see second-charge loans included.

The equity-release scheme supposedly operated by Coronation Street&#39s serial killer IFA Richard Hillman&#39s has done nothing to improve the market&#39s reputation.

The term equity release has already earned a tainted reputation within the industry and advisers have raised concerns that the product presents unregulated risks to the most vulnerable, elderly clients.

Mortgage Force managing director Rob Clifford says: “It has been a missed opportunity and I think it is reassuring that advisers are calling for regulation. Sharp operators should be outlawed. These products are targeted at the most vulnerable people who need the protection regulation affords.

“It is an obvious area for a future misselling scandal because unqualified advisers will gravitate towards it. This is exactly what happened when the investment market first became regulated.”

This opinion is shared by Mortgage Code Compliance Board head of communications Brad Baker who believes there has always been a strong indication that advisers thought this area was a gap in the regulatory umbrella defined by the Treasury.

Baker says: “As we said following the publication of CP146, we firmly believe that equity release should be brought under the regulator&#39s jurisdiction. It is important to see the distinction between the mortgage and the investment product. There is a big difference between someone buying a second home and a professional landlord buying up properties.”

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