FSA Extends Protection To New Home Finance Plans

by Robin Pilgrim, LawAndTax-News.com, London

01 November 2006

The UK's Financial Services Authority (FSA) on Monday published final rules for the regulation of Home Reversion plans (HRs) and Islamic law-compliant Home Purchase Plans (HPPs), which will come within its scope next year.

The FSA's rules, which follow a consultation earlier this year, are designed to ensure that people who wish to take out either of these products (both based on sale and lease arrangements), enjoy consumer protection comparable to that already in place for equivalent products - lifetime mortgages in the case of HRs and conventional mortgages for HPPs.

The new regimes will come into force on April 6, 2007 following Parliament's approval of the necessary secondary legislation last week. The FSA will start to accept authorisation applications for these new ‘home finance’ activities from November 6 this year.

Dan Waters, FSA Director of Retail Policy, observed that:

"Regulation of these sale and lease arrangements introduces important new protections for consumers in the housing market. It will help older consumers looking to release equity from their homes by extending protection over both sectors of the equity release market. It will also ensure fairer treatment for consumers wanting to buy their homes in way that is compliant with Islamic law, building on the work that we have already done in the field of Islamic financial services to improve consumer access to these products."

"Regulation is only five months away and firms need to make sure that they are fully prepared. We start accepting applications from November 6 and firms are advised to apply early to ensure that they are ready in good time for the start of the new regimes next April."

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