SHIP CALLS FOR GOVERNMENT REGULATION OF HOME REVERSION SCHEMES TO PROTECT CONSUMERS AND PLANS OWN TOUGH NEW CODE

UK equity release industry body, SHIP (Safe Home Income Plans), which represents 90% of the equity release industry, has submitted a strong paper in response to the Treasury consultation on home reversion schemes, urging the Government to regulate them.

SHIP believes regulation of home reversion schemes is imperative to ensure that consumers benefit from a fair choice of products in this fast growing marketplace and to protect consumers against the risk of unauthorised providers entering the market.The Government plans to regulate lifetime mortgages from October, yet home reversion plans are still under consideration.

SHIP is concerned that the introduction of regulation on lifetime mortgages in October, and not home reversions, will lead to a two-tier system.This is turn may result in consumer confusion, and may lead to brokers favouring lifetime mortgages over home reversions due to regulatory reasons and will ultimately reduce overall development of the equity release market.

Further to this, SHIP is pre-empting a move by the Government to regulate the industry and will introduce its own tough code of practice to ensure best possible consumer protection continues. In conjunction with this, SHIP is reviewing its rules and its role in enforcing compliance and a toughened complaints procedure. Central to the review, SHIP is also considering whether to bring in a new membership category to cover intermediaries. SHIP expects to make an announcement on these changes later in the Spring.

SHIP has contributed to Government’s consultation on home reversion schemes with the following key points:

• Some SHIP members have sold reversion products over the last 35 years. No planholder who has taken out a plan with a SHIP member has been dispossessed of their home, or been exposed to negative equity.

 • Without regulation home reversion products may be created without appropriate minimum product safeguards and sold by brokers but subsequently administered by unknown private individuals with no professional experience.

 • Introduction of regulation would ensure home reversion products are sold in a manner which meets selling and information standards of other financial products.

• A decision to regulate the sale of home reversions, combined with Government initiatives to promote REITS (Real Estate Investment Trusts), should lead to the availability of substantial new funding for the sector and consequent improvement of product terms, plus product diversification.

• It is possible to use regulations by the FSA to reduce the risk of mis-selling and to eliminate the confusion regarding regulatory boundary however it is not possible or desirable to regulate pricing.

SHIP has been an active consumer watchdog since its inception in 1991 and recently established two product boards - representing lifetime mortgage and home reversion plans - to work alongside regulators to lobby the Government in the rapidly expanding equity release market.

The volume and value of home reversions has been in decline for four consecutive years, which is in contrast to a steadily increasing total equity release market. SHIP believes the uncertainty over the future regulatory environment has primarily contributed to reducing the attraction of home reversions in comparison with lifetime mortgages and this needs to be addressed.

Jon King, Chairman of SHIP said:

For further information, please contact:

Laura O’Connell/Sally Johnson The Wriglesworth Consultancy Phone: 0207 620 2228

Notes to Editors:

About SHIP:

Safe Home Income Plans (SHIP) is the UK’s leading professional body for equity release product providers, representing the interests of its 18 members who provide home income and equity release plans.At present 90% of the equity release market (in volume terms) is represented by SHIP members. In 1991 SHIP was launched to promote safe schemes. The founder members were Allchurches Life, Hodge Equity Release, Home & Capital Trust and GE Life. Since then SHIP has enabled the home income plan market to expand again. Surveys carried out by member firms point to over 98% of plan holders being happy with their plans. SHIP is dedicated entirely to the protection of planholders and promotion of safe home income and equity release plans. SHIP’s aim is to reassure the general public that by appointing a SHIP member to represent them they will receive in return the highest level of integrity and service, combined with a fair, straightforward full presentation of their plans. Each SHIP member, is bound by a vigorously enforced Code of Practice and adheres to professional Rules of Conduct. This code has been welcomed by Age Concern.Any scheme endorsed with the SHIP logo will be properly explained and safe.A SHIP plan guarantees that you cannot lose your home – whatever happens to the stock market or interest rates. SHIP has played a vital role in the development of a safe equity release market in the UK to date and is best placed and committed to leading the market and protecting consumers interests going forward. SHIP’s 18 members are:Abbey,AMP, BPT Bridgewater, Ecclesiastical Life, GE Life, Hodge Equity Release, Home & Capital Trust, Key Retirement Solutions, Legal & General, Mortgage Express, National Counties Building Society, New Life Mortgages, Northern Rock, Norwich Union, Portman Building Society, Prudential, Standard Life, Stroud and Swindon Building Society.