FSA criticised over equity release rules
16 April 2012
The Financial Services Authority (FSA) has been criticised by the Financial Services Consumer Panel (FSCP) over changes to rules surrounding the equity release industry.
In a bid to make the situation easier and safer for those seeking advice on mortgages, sale-and-rent-back schemes and equity release schemes, the FSA announced that non-advised sales are going to be banned to protect consumers.
However, Adam Phillips, chairman of the FSCP, claimed the new rules have gone too far and will make the buying process for this type of product a lot more difficult.
Limited requirements
Speaking to Mortgage Strategy, he stated the requirements ought to be limited to those customers "who are credit-impaired, equity release, sale-and-rent-back, Right to Buy and potentially first-time buyers".
"These are the groups of people who may need advice but the majority of individuals will not," he was quoted as saying by the news provider.
Meanwhile, the Association of Mortgage Intermediaries (AMI) has warned that if the FSA was to do a u-turn on its changes to rules surrounding non-advised sales, it would have to launch another consultation period with the industry in order to do so.
Final rules
?AMI director Robert Sinclair suggested the fight over the amendments is now going to be over until the summer, when the FSA announces its final policy rules on the area.
"We are hoping to have discussions with the Council of Mortgage Lenders and the Building Societies Association to find some common ground between advised sales and execution-only," he said, adding many of the Mortgage Market Review recommendations are interlinked.
Earlier in the month, Personal Finance Society head Fay Goddard stated there is a rightful place in the market for equity release plans, but told Money Marketing that there is a need for tighter regulation of the sector to be introduced in order to provide more protection for consumers.
Those who want to learn more about unlocking money from the value of their home could do so by using the equity release calculator from Key Retirement Solutions.