Money Management is reporting that the Senior Australian Equity Release Associaiton (SEQUAL) is concerned the Federal Government’s desire to regulate reverse mortgage product design could have a harmful effect on the industry.
The government is reviewing the process of reverse mortgages, focusing on product disclosure, design, and consumer financial literacy being the three areas being discussed. In the weeks leading up to the Federal Election, the Government promised to provide greater disclosure of equity release products and statutory protection against negative equity — with the two changes to be implemented by mid 2012.
“[Statutory protection for the no negative equity guarantee] is a critical aspect of consumer protection which, because the SEQUAL membership is not compulsory, cannot be reliably delivered across the industry unless there is regulatory change,” said Kevin Conlon, chief executive, of SEQUAL.
“However, product design is driven by not just competitive tension but also the availability of funding, and influencing product design can have an effect on not only consumer protection but the availability of the products,” Conlon said.