Equity Release News

Are all Home Reversion Plans regulated by the FCA?

Home reversion

The FSA is the Financial Services Authority; they are responsible for the regulation of financial services in the United Kingdom. In April 2013, the FSA became the FCA. This new regulatory agency has the same mission as the FSA. The FCA is still going to regulate financial plans including equity release schemes.

Any company that is involved in home reversion plans will be regulated by the FCA. The FCA has four main objectives and they are to maintain confidence in the financial system; to contribute to the protection and enhancement of the stability in the UK financial system; to protect consumers; and to reduce the extent of any financial crime that is carried out by a regulated person.

With home reversion plans you should be entitled to a no negative equity guarantee. This means that if your property does not sell for the amount that you have borrowed, it becomes the problem of the lender and not the problem of the home owner. Prior to the change in regulations, the home reversion scheme was seen as a rip-off. Transparency has also helped with regard to these plans. It is now understood that negative equity will not apply to equity release schemes. The newly named FCA will continue to ensure this.

The FSA regulated companies in order to keep to this type of equity guarantee so that the customer is protected and is not in a position where they owe more money. If you have gone to a provider that is not regulated by the FSA, you could find yourself with hidden debts and more problems down the line. If you have died and do not have this guarantee then the problem becomes that of your beneficiaries. This then adds an additional pressure on them.

Typically, companies unwilling to offer an equity guarantee are scams, not listed on SHIP (the standards board), or are not based in the United Kingdom. There are ways to ensure you and your family are not caught off guard by improper home reversion providers.

When you approach a company that offers home reversion plans, do a background check on them to make sure that the FCA (or former FSA) does actually regulate them and that they will not be able to conduct any financial crimes against you. If they are regulated and you find a problem then you are entitled to report them straight to the FCA.

The FCA website will help you to find companies that are regulated by the FCA. Also, the internet has become a wealth of information and can aid you in finding various companies that are FCA approved. A no negative equity guarantee helps to protect when you release equity or have a home reversion plan. It can help you to have peace of mind when you release money from your property and to know that the FCA is there to protect and help you with your finance.

Another way to ensure your safety with home reversion plans is to conduct due diligence. You have the option of doing research online. Plenty of sites can be trusted, especially if you go directly to the regulated FCA providers. If you doubt a site you have pulled up there is another way to check the legitimacy of what they say.

It might seem mundane to visit two or three sites; however, this gives you a double check option. You can ensure what you have read in one location online is the same as another site. From this you can trust in the basic information and then follow up with a home reversion agent or solicitor. It never hurts to read as much as you can and then check your facts with a person in the industry.

There are limits to what the FCA can do for you. While you may find they support you due to improper clauses in your agreement, if you signed the agreement where there is nothing against the law in the document, there is little recourse the FCA has to protect you.

Never sign an agreement until you understand all the pros and cons of home reversion plans. Take a look at other equity release options such as lifetime mortgages. Once you have ascertained the product that is befitting your monetary situation, then you can feel more comfortable signing an agreement. The FCA is there to protect your rights and ensure reversion agents are remaining within set laws, not to correct an error made due to misunderstandings or confusion.