The Treasury is to review its decision to exclude home reversion schemes from its plans for the statutory regulation of the mortgage market.
Although it has not agreed a definite timetable, it has announced that a consultation paper examining the options for this £250m-a-year sector of the equity release market will be published in the autumn.
Commenting on the decision, Paul Boateng, chief secretary to the Treasury, said: ‘Given the rapid expansion of the market and concerns over the potential for consumer detriment there will be an open consultation examining the cost and benefits of regulation. If it is decided that regulation is appropriate the FSA will be given powers to regulate.’
The three-month consultation is thought to have been at least partly the result of complaints from within the mortgage industry in response to a previous consultation paper (CP146).
Chris Cummings, director of the Association of Mortgage Intermediaries (AMI), commended the decision. He said that if mortgage based equity release products will be regulated, and home reversions will not, it will increase the risk of non-regulated advisers offering incomplete advice. He said: ‘The consumers in this market can be among the most vulnerable in society and need professional advice from a qualified and regulated mortgage intermediary. ‘