Reverse mortgages are currently the subject of a surveillance exercise conducted by the Australian Securities and Investments Commission (ASIC).
The ASIC surveillance has been confirmed by ASIC chairman, Greg Medcraft in an address to a forum in Adelaide in which he not only pointed to the upcoming surveillance of reverse mortgages but also the regulator’s continued monitoring of the provision of financial advice to the elderly.
The ASIC chairman said that within the surveillance exercise, ASIC would be testing compliance with responsible lending obligations, measuring consumer understanding of the products and looking at loan characteristics, borrowing experiences and outcomes.
“Through our surveillance, if we do find serious non-compliance, we will take enforcement action,” Medcraft said, adding that the regulator would be issuing a report on its findings early next year.
On the question of financial advice to the elderly, Medcraft noted that self-managed superannuation funds (SMSFs) were one particular ASIC focus.
“We look at how financial advice deals with the issue of the ongoing suitability of an SMSF as ageing progresses. That is, advice should not only be about the establishment of a SMSF, but also about appropriate exit strategies if a person has an issue with cognitive decline and diminished capacity to manage an SMSF.”