MIp22-23_1209:MI 12 Jan 24/11/2009 16:34 Page 2
22
Equity release
Punching
above its
weight?
Alison Beeston, compliance &
communications manager at Bridgewater
Equity Release, is worried by the lack of
clarity being made between HRP and SRB
T
he Sale and Rent Bank (SRB) was already in place. The Office of Fair
sector seems to have punched Trading (OFT) just needed to ensure
above its weight during 2009; any product providers that offered products Unfortunately, even
certainly there are a number of that fell outside the HRP definition were the definition within the
high-profile providers who are not allowed to continue to trade. This would Regulated Activities Order, which sets the
pushing their wares vociferously have been a far more sensible, cost-effective framework for regulation, only distinguishes
at the broker community. However, we way to protect the consumer in this small the ‘security of tenure’ difference by stating at
should not forget that as far as SRB is market. the end ‘...but excluding any arrangement that
concerned we are still in the midst of interim However, as the FSA are now already in is a regulated home reversion plan’. The FSA,
FSA regulation. ‘interim regime country’ it is absolutely therefore, is left with the task of ensuring that
For the Equity Release market, and in imperative that we have a full regime for the the full regime proposed for SRB makes sure
particular those involved in Home Reversion SRB market which deals with all the issues the that the consumer is made aware of this
Plans (HRPs), there are a significant number OFT first raised. crucial and vital distinction between the two
of concerns associated with this market even products.
within the proposed full SRB regime. Similarities
There are certain similarities between an HRP Contention
Consumer protection and a SRB in that both allow the customer to Security of tenure for SRB customers has been a
We have argued that a separate regulatory sell all or part of their home in exchange for a real bone of contention for many years and the
regime was not necessary for SRBs; for the discounted cash lump sum. However, there is way that some SRB providers abused the
sake of consumer protection the SRB should a fundamental and crucial difference – with situation, in terms of ousting customers from
have been brought within the definition of a an HRP the client’s security of tenure is their homes after a very short period post-SRB,
HRP. The regulatory definition of HRP protected for life; SRBs do not offer this was one of the reasons why the OFT took action
already allows for a product that charges guarantee even though this is stated as one of against a number of firms and why SRB was
rent and does not restrict the age of the the major risks of the SRB product by both subsequently brought under the auspices of the
customer – basically the regulatory regime the OFT and FSA. FSA quickly.
December 2009 Mortgage Introducer www.mortgageintroducer.com
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44