REGULATION OF FINANCIAL SERVICES (LAND TRANSACTIONS) BILL

KEY MEASURES

• Extension of existing order-making power to extend the scope of the Financial Services Authority to ensure better protection for consumers who take out:
  -  Home reversion schemes (homeowner sells stake in their property in return for cash lump sum)
  -  Ijara products (mortgage-like arrangements compatible with Shari'a law to enable Muslims to buy a house)
  -  Flexible tenure products (where a provider may buy back shares of a property if the owners find themselves in financial difficulty -offered by some registered social landlords)

TERRITORIAL EXTENT

The Bill extends to England, Wales, Scotland and Northern Ireland. Financial services are a reserved matter under the Scotland Act 1998 and an excepted matter under the Northern Ireland Act 1998. 

COMMENTS

If you have any comments on the proposals you can email them to:

Paul.Pippard@hm-treasury.gov.uk
Matt.Holmes@hm-treasury.gov.uk

ADDITIONAL INFORMATION

The Government's Pensions' Green Paper* stated that the Government would be 'looking at options to create a level playing field for the regulation of equity release and home reversion plans to protect consumers and make the market work better.'  A consultation document "Regulating home reversion plans" was published by HM Treasury on 11 November 2003. The then Financial Secretary to the Treasury, Ruth Kelly, announced on 10 May 2004 her intention to bring home reversion products into the scope of FSA regulation.  A further consultation document 'Defining Home Reversions' was published on 26 July 2004 and consulted on the content of the definition, including whether Ijara products and flexible tenure products should be included.

The Bill was introduced as a ten-minute rule Bill by David Stewart MP on 26 January 2005.  Second reading was tabled for 22 April 2005 but was not reached as Parliament was dissolved for the forthcoming election.

* Simplicity, Security and Choice: Working and Saving for Retirement
(Department for Work and Pensions - December 2002)