Equity Release Industry Council chief executive Kevin Conlon said following ASIC’s Report 586 into the reverse mortgage industry in 2018, there had been “a level of disinterest” at the regulator to addressing shortcomings in the equity release sector.
“ASIC pulled together a working group and they wanted to consult with industry to determine what needed to change in order to provide better consumer protections,” Mr Conlon said.
“I was provided with the working papers and given the opportunity to comment, but I found that my comments didn’t carry far and I’ve been told by a product provider that participated that they abandoned the effort of making submissions because they found their comments weren’t acted on.
“ASIC seemed to be conducting a limited conversation in order to tick the box and say they completed their review.”
With the government’s retirement income review having highlighted the family home as a largely untapped asset in the system, which can provide significant benefits to replacement rates with as little as a $5,000 a year equity drawdown rate, Mr Conlon said it was surprising ASIC still had to be “dragged unwillingly” into better educating consumers about equity release.
“Too often the regulator and policymakers have had to be dragged unwillingly into a fact-based discussion and active involvement in ensuring that consumers better understand equity release and the options available to them,” he said.
“It’s not for me or providers or regulators to tell seniors what to do with their housing wealth, but it’s important that they do everything they can to make informed decisions around accessing that wealth.”
Mr Conlon pointed to current information on ASIC’s MoneySmart website around equity release, which was mislabelled and contained omissions of newer product categories available.
“There are a number of fundamental flaws in the information ASIC provides – they misunderstand the term ‘reverse mortgages’ as opposed to equity release,” he said.
“Under the equity release category there are a number of options, one of which is a reverse mortgage, and alongside that you’ve got limited offering in home reversion in Sydney and Melbourne and a third option of the equity release deed.
“First of all we’ve got to get the terminology right and if the regulator can’t do that, how can you expect consumers to understand that?”
There is a real lack of understanding within Treasury and ASIC about Equity Release. A Consultation Paper released by Treasury gave 2 weeks for a response and clearly indicates the solicitors writing the Draft legislation have no knowledge of Equity Release – nor do they really want to – they should be embarrassed.
I note that the Governments own Pension Loan Scheme does not rate a mention on Moneysmart nor does the DomaCom Senior Equity Release product. Not a very smart page.