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Home reversion will be regulated by FSA

Home reversion is to be regulated by the FSA, after an announcement in the Queen’s Speech this week, putting it on an equal footing with lifetime mortgages.

The legislation will see home reversion put under the scrutiny of the regulator for the first time after it was left out of the original plans for mortgage regulation.

The Treasury announced last year that it was look- ing at implementing legislation on home reversion although no concrete plans were laid down.

Lifetime mortgages will remain regulated by the FSA under current mortgage regulation rules which came into force in November and it is thought that home-reversion regulation will be modelled on this framework.

Legislation is set to be enacted within 18 months but it could take up to three years for regulation to be implemented fully by the FSA.

Home reversion accounts for around 3.5 per cent of the equity-release market although the Grainger Trust predicts this could rise to 10 per cent by the end of this year.

Norwich Union director of personal finance Mark Kelly welcomes the move, saying it will bring consistency across the industry as well as clearer information and access to compensation.

He says it would help the industry and benefit customers if the timetable for this regulation progresses as quickly as possible.

Kelly says: “We have lobbied hard for the regulation of reversion plans and believe it is vital to create a level playing field between reversion and lifetime mortgages.”

Ship chairman and Hodge Equity Release managing director Jon King says: “We are obviously delighted by this announcement. We have known that it was part of the Govern-ment’s plans but it is good to see it coming in so soon into their third term.”


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