Home equity release schemes to have code of practice
The Government is to develop a code of practice for home equity release schemes, in order to provide a level of protection for older people's financial interests.
Friday, May 13th 2005, 6:41AM
"Funding of $258,000 (GST excl) over two years will be made available in next week's budget to enable the Office for Senior Citizens to develop the code," Prime Minister Helen Clark said today.
Home equity release schemes are a type of insurance scheme that release the equity older people have in their home, in the form of an annuity, lump sum, or periodic payment, which can be used to enhance an older person's lifestyle.
"The schemes are a recognised way in which older people can utilise the equity in their home to enjoy a higher standard of living, but the government wants to ensure that proper standards and practices are in place to regulate the schemes," Clark said.
The Minister for Senior Citizens, Ruth Dyson, has asked officials to examine the need for standards, so older people can have confidence in the schemes on offer in the New Zealand market.
"The Office for Senior Citizens is examining how reverse mortgage schemes are regulated in other countries, and what industry controls are in place. It will consult widely with older people's interest groups, providers of home equity release schemes, and other stakeholders.
"The code of practice will be negotiated with the insurance industry, and will cover issues such as disclosure of terms and conditions, risk management practices and recoveries. It will not seek to promote or endorse home equity release schemes," Helen Clark said.
The funding will be made available over 2005-07, by reprioritising spending within Vote Social Development, with no impact on the operating balance.
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