The Financial Services Authority’s new rules to be implemented from April 2014 have various implications for the equity release market which have been well received by the trade body.
Andrea Rozario, director general of The Equity Release Council, said: “The MMR announcement is excellent news for the industry as it looks to make it far more user-friendly for consumers and help people in mortgage limbo.”
Under the new rules lenders are no longer required to impose the state pension age onto borrowers as the point at which a future assessment of income into retirement must take place.
Rozario was “particularly pleased” that borrowers would not be discriminated against due to age.
She said: “An increasing number of people are choosing to work into their late sixties or beyond and this change means they should have some of the same opportunities as younger borrowers.”
A significant change for the industry came after the FSA clarified its rules on the need for advice.
It decided that advice would not be needed for customers choosing to withdraw funds from a previously agreed drawdown facility.
“We are delighted the FSA has listened to the industry and enhanced the clear provider guidelines,” said Rozario.
And she added: “With a rapidly aging population, this market is likely to continue to grow in the future and the MMR will help it to do so.”
The FSA determined that all equity release customers would have to go through the advised-sale process before they are able to reject the advice.
However it added: “Due to the high standards imposed by the trade body they do not expect many equity release sales to be execution-only.”
