SEQUAL has cautioned government against over-regulating the reverse mortgage industry in view of its track record of ethical behaviour, the industry body’s chief executive said.
“There are some serious warnings there about ensuring that the regulations don’t overburden an industry that has already demonstrated a track record of being ethical and efficient,” Conlon told InvestorDaily.
Conlon was referring to Assistant Treasurer Bill Shorten’s draft legislation, released on Monday, on the $3 billion reverse-mortgage market.
Senior Australians Equity Release Association (SEQUAL) represents nine financial institutions, including Commonwealth Bank of Australia and its wholly owned BankWest, as well as Westpac’s St George Bank.
He said SEQUAL is part of the within the equity release consultation working group, enabling it to convey its views to Treasury.
SEQUAL and other members of the working group are set to speak with Treasury through a teleconference hook-up later today and the industry group plans to submit its formal response by the deadline on Wednesday.
Conlon said the draft legislation otherwise held no surprises for the equity release market.
“It reflects my prediction earlier in the year that we will see statutory protection uplifting the existing self-regulatory initiatives introduced by SEQUAL,” he said.
“I refer specifically to the no-negative-equity guarantee and to the key facts document that is proposed.”
Negative-equity protection guarantees that if the sale of the reverse mortgage-holder’s property does not cover the debt, the lender bears the loss.
Separately, the Productivity Commission’s report on aged care, released earlier this week, suggested the government establish its own equity-release scheme.
“While this is an interesting suggestion, I think industry would probably see it as more appropriate for government to look at ways in which they can encourage greater competition in the equity-release market, rather than they themselves competing with a product,” Conlon said.
“However, we’re happy to work with government on that aspect of the report.”
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