FSA stance on equity release 'is outdated'
01 June 2012
The Financial Services Authority (FSA) has an "outdated" view of the equity release industry and needs to soften its stance on the product.
This is the view of former Conservative shadow pensions minister Nigel Waterson, who is the chairman of the Equity Release Council (ERC), which is taking over from Safe Home Income Plans (Ship) as the regulator of the sector.
Speaking to Money Marketing, he explained equity release schemes are still seen as being "high-risk" by the FSA, despite recent changes in the industry.
"This approach is a bit outdated and needs to be looked at again. We hope the FSA will be more comfortable with advisers who have our kitemark because we add an extra layer of regulation and governance," he was quoted as saying by the news provider.
A spokesman for the FSA admitted that there could be a shift in the body's opinion of equity release plans in the coming months, pointing out there is scope for reform in the area.
Mortgage market review
"The mortgage market review consultation in December confirmed our intention to make changes such as compulsory advice for every equity release sale," the FSA spokesman added.
Equity release providers will be asked to work with the ERC over the course of the year to come up with a new, broader code of conduct for the industry.
Advisers, lawyers, surveyors and other interested parties will be able to join the ERC in a change of policy from its days as Ship.
A recent report by AOL Money highlighted the fact there is a large gap between the amount of money people expect to be given as a pension in their retirement and the cash they are going to need in order to live the quality of life they intend to.
It was noted by the news provider that there is "no doubt" many homeowners are going to be turning to equity release schemes in the near future in a bid to supplement their incomes.
Individuals who want to find out more about their options in this area could use the equity release calculator from Key Retirement Solutions to see how much they could be in line to receive.
Posted by Richard Planner