The Treasury announced this week that home reversion schemes are to be regulated by the FSA alongside lifetime mortgages but has already run into criticism over the length of time before the new regime come into effect.
Financial secretary Ruth Kelly says regulation of the sector will help people make informed choices. It will also offer consumer protection, which is important because buying a home reversion pol-icy can have implications for tax, benefits, inheritance and long-term financial planning.
The Treasury will shortly consult on the scope of regulation, which will be followed by an FSA consultation on the details of the regulatory regime. The change will require primary legislation, which will be introduced when the Parliamentary timetable permits. It is speculated that regulation will come into force in 18 months to two years.
Safe Home Income Plans chairman Jon King says there is likely to be a long delay before regulation is introduced.
CML head of external affairs Sue Anderson says the timetable means home reversion regulation is unlikely to dovetail with the onset of mortgage regulation in October.
Of the 53 consultation responses the Treasury received, 46 supported regulation. Providers, trade and consumer bodies welcomed it. The only dissenters were small brokers, who were concerned that the costs of regulation would outweigh any benefits.
Kelly says: “Legislation to regulate home reversion plans will be brought forward as soon as parliamentary time allows.”
King says: “We will still go ahead with our plans for an interim regulatory regime to bolster confidence as it is implicit in this decision from the Treasury that there will be a long delay.”
Norwich Union Personal Finance director Mark Kelly says: “The interim measures will be fully supported by Norwich Union but we urge the Treasury to fast track this process.”