The decision on Tuesday prompted a feast of debate from all sides of the industry, with firms many thought had nothing to do with Hips getting their two pennies’ worth in.
Picking apart the various comments flooding into news desks up and down the country and deciding whether the Government’s U-turn was a positive or negative move is tricky because opinions are based on so many vested interests, not least from the firms that are estimated to have spent over £250m in total – so far – on launching their propositions.
And already wounds are starting to open in the industry following the Department for Communities and Local Government’s seismic shift in approach. Property website Rightmove is one of the more high-profile early casualties after millions were reported to have been wiped off its share price by nervous investors selling out of the stock.
What is clear, however, is that the controversial scheme is in total disarray as many considered HCRs to be the fundamental component of Hips, especially considering the point of Hips is for the buyer to get a report on the condition of the home they are about to spend potentially hundreds of thousands of pounds on.
Had the Hips bombshell not dropped then the results of the FSA’s latest equity release mystery shopping exercise would have taken centre stage this week.
The regulator issued a firm rebuke to advisers whose standards have improved a little from a similar study last year, but not to the required standards to maintain consumer protection. The good news was that large product providers are hitting their compliance targets.
One of the big issues raised was that firms that only dabble in the market should either cease their activities or pass leads onto experts.
Yet whatever the results, question marks will again be raised about the sample size as only 23 companies were surveyed, and many will question the statistical relevance of the findings, especially after the Financial Services Practitioner Panel last week blasted the FSA for its continued reliance on small-sample mystery shops to influence policy.
Equity release has previously been described as a misselling scandal waiting to happen by the doom-merchants in the market, but, in a separate development, the wider mortgage industry is likely to be looking over its shoulder at a new claims firm set up to help consumers win compensation where they feel they have been missold a mortgage.
The company, Loancheck, works as a website whereby borrows input their loan details and its software determines whether there is a risk of a missell or of overcharging. If so, the lender is obliged to send details of the loan if the customers gives permission, and Loancheck’s lawyers can then seek compensation through the legal system.
The irony is that only a few days ago, the Association of Mortgage Intermediaries warned that the market would soon become targets for misselling claims in various press reports. Little did they know how soon that would be.