In response to the Government’s election promise of greater consumer protection measures for reverse mortgages, the Senior Australians Equity Release Association (SEQUAL) has warned proper regard needs to be given to the industry’s self-regulatory initiatives that already exist.
Prime Minister Julia Gillard stated at a press conference in Brisbane that reverse mortgages and home reversion schemes do not currently include protections that recognise their special nature.
She promised that a re-elected Labor Government would provide greater disclosure of the features and fees on equity release products, as well as protection against negative equity.
However, SEQUAL chief Kevin Conlon said the two initiatives identified by Gillard were already market practice for SEQUAL members, and that product disclosure and a mandatory obligation to provide a ‘no negative equity guarantee’ were conditions of SEQUAL membership.
He came out in support of Gillard’s package ‘Delivering for Seniors’, but provided a warning should the current, self-regulatory measures be ignored by the Government and regulators.
“Equity release is likely to emerge as a significant part of retirement funding, and the current debate around advice and regulatory review needs to be carefully considered against that growing demand to ensure choices and legitimate strategies in retirement funding are not extinguished through unnecessary regulatory change,” said Conlon.
“It is only through mutual respect that Government, regulators and industry will deliver on the common goal of ensuring that consumers are well placed to make fully informed decisions about their retirement funding,” said Conlon.
If re-elected, a Labor Government would introduce the new regulatory measures for reverse mortgages by mid 2012.
