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Property loan reversions to be regulated

9 December 2004

Industry insiders believe that home reversion schemes, in which homeowners forfeit part of their property in return for a lump sum payment, could become regulated within weeks.

According to the media reports, Helen McCarthy, policy adviser at the Association of British Insurers (ABI), believes that the Treasury could even introduce legislation this week.

Home reversion schemes, popular amongst retired people, have proved controversial as many believe they are too complex and offer poor value.

In particular, elderly groups have expressed concern that leaving the sector unregulated could allow a cowboy element to take advantage of vulnerable pensioners.

Ms McCarthy said that ministers were under pressure from the ABI and other groups to introduce legislation, which could pave the way for full scale regulation by the Financial Services Authority (FSA).

"Because of the short parliamentary session, if they are going to do something, they have to do it soon," she added.