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PRA delays equity release solvency rules by a year

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  • 26/10/2018
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PRA delays equity release solvency rules by a year
The Prudential Regulation Authority (PRA) has delayed the introduction of its proposed rules changes concerning solvency requirements for equity release lenders offering no negative equity guarantees (NNEGs).

 

Its consultation, which was published in early July, closed on 30 September and set out further detail on the expectations for firms investing in equity release mortgage portfolios.

The PRA initially proposed implementing the new rules at the end of this year.

However, in response to the consultation feedback it has pushed this back to 31 December 2019.

In a statement, the PRA said: “The proposed implementation date for the proposals in the CP was Monday 31 December 2018. Based on feedback to the consultation, the PRA has decided that the implementation date will not be before 31 December 2019.

“The PRA is making this announcement now in order to clarify the position for insurers planning their year-end 2018 processes.

“The PRA is currently giving careful consideration to the consultation responses and the impact, if any, of the updated implementation date to the proposed phase-in period. The PRA will publish final policy and supervisory statements in due course,” it added.

The new requirements will change how equity release providers assess their liabilities which could require lenders to hold more capital to cover their lending.

Some lenders had warned that the changes could affect their profit levels and so the year delay is likely to be welcomed by the industry.

 

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