Do you trust financial companies? Well, judging by the constant stream of negative news and articles in the media it’s plain that their reputations are far from clean. This is why the UK Regulator, the Financial Services Authority (FSA) is such as important institution for us consumers. Think of the FSA as a financial policeman making sure that the public is protected from financial sharks and other predators.
Can You Believe That Home Reversion Schemes Are Not Regulated
Home Reversion schemes are a subset of Equity Release plans which are used by the older generation (60-65+) to release accumulated paper profits in their homes without having to sell up and move out. For more information please read the Home reversion section of the LearnMoney.co.uk website.
But what's so strange is that Equity Release plans and in turn Home Reversion is not regulated by the FSA. Instead it’s regulated by a toothless organisation funded by the Equity Release providers which has no statutory powers.
But all this is going to change in the Spring 2007 when Home Reversion Schemes come under the regulation umbrella of the FSA.
Why Is Regulation So Important
Two main reasons -
1. Financial products are often tricky to understand so one of the main jobs of the FSA is to make sure consumers are sold suitable products with the necessary health warnings on them. This alongside the products being marketed correctly
2. Consumers have a government body to approach if they’ve been mis-sold a financial product, money has been stolen from them or they’ve been defrauded etc
And nowhere is this regulation more warranted that with a product that is not only sold to the elderly but deals in their most important asset – their homes.
Summary
If you’re thinking of taking out a Home Reversion scheme then you’re strongly advised to do three things –
1. Do as much research as you can into what you’re buying and the associated advantages and disadvantages
2. Answer and understand the implications of these 4 Equity Release questions which have been drawn up by theActuarial Profession
3. Try and wait till Home Reversion Schemes are regulated by the FSA to give you far better financial protection and security
