Final rules on home reversion plans and home purchase plans issued

There was broad acceptance by respondents of FSA proposals under CP06/8 for regulation of home reversion (HR) plans and Islamic law-compliance home purchase plans (HPPs), which will take effect on 6 April next year. Amendments, for HRs, include a requirement that firms obtain confirmation from the customer’s legal adviser that they have received legal advice. In exceptional cases, the transaction may go ahead without confirmation, for example if the customer is a property lawyer. Although there was consensus on the need for fair and independent valuations, providers and specialist intermediaries were strongly against the proposal for the valuer to be the consumer’s agent, in contrast to the position of the Consumer Panel. Firms argued that they would be unwilling to rely on a valuation obtained by the consumer and would need to commission their own which would produce delay, duplication and extra cost. It could also lead to disputes if the valuations differed. The FSA accepted this argument and the final rules do not require the valuer to be an agent of the consumer. It notes that to be considered competent the valuer will need to be qualified and belong to a relevant professional body, such as the Royal Institution of Chartered Surveyors (RICS). The independence criteria require that the consumer may choose the valuer and the firm may only object to the selection on reasonable grounds; the valuer satisfies the competence test; the valuer owes a duty of care to the consumer; and there is recourse to an independent complaints procedure, which is able to make a determination that binds the valuer.