Print friendly version 3 Sep 2010

Warning over unregulated equity release

Older homeowners have been urged to tread carefully when it comes to unregulated equity release plans.

Equity release plans allow the over-55s to free up some of the cash tied up in their properties in the form of a regular income and/or lump sum, and the vast majority are regulated by the Financial Services Authority (FSA).

However, the Society of Equity Release Advisers has sounded a warning after provider Equity IQ launched a scheme called the Property Income Plan, which looks like an equity release plan, but is not strictly defined as such and does not fall under FSA jurisdiction.

Simon Chalk, equity release planner at LaterLiving, pointed out that the deals do not adhere to industry regulations and that the company is not authorised by the FSA.

Chalk said that potential equity release users could easily be confused by this product, and fail to differentiate between it and regulated schemes on the market like home reversion plans and lifetime mortgages.

The news comes after it was revealed by Callcredit Information Group that almost 70% of British consumers fail to seek adequate advice when faced with a financially difficult situation.


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