A GFSC spokeswoman said the regulatory regime that allowed equity release came into effect at the start of the year. The newly-approved ordinance ‘is intended to address specific customary law issues that previously made it difficult, albeit there was no legal bar, for lenders to offer lifetime mortgages in the Bailiwick’.
‘While distinct from the commission’s regulatory framework, it complements it and should help provide lenders with greater legal certainty,’ she added.
Policy & Resources president Lindsay de Sausmarez told the States last week that the idea of bringing this financial product to the island was first spoken about seriously in 2003 and it was not until 2019 that a resolution was made to introduce it.
It would enable homeowners who are ‘asset rich but cash poor’ to take out a new loan against their property.
‘I know there is strong demand within the community to be able to release some of the value of that significant asset to improve quality of life without having to leave their home,’ she said.
The new ordinance comes into effect on 1 May. Deputy de Sausmarez said that the GFSC had consulted the Association of Guernsey Banks as part of the work towards changing the law and this offered some support for the concept.
‘Additionally, the two banks which may lend by way of equity release finance have also been engaged individually and advised they would be unlikely to offer this product in Guernsey without this ordinance being place.’
There had also been a focus on safeguards, she said, against issues that had give some equity release schemes in the UK a bad name. These included habitually higher interest rates, the treatment of surviving co-habitees, and the potentially for negative equity.
But updated lending, credit and finance rules included measures to ensure advisers are locally-based, hold an appropriate qualification, and assess customers’ vulnerability on a case-by-case basis to enable them to give bespoke advice to each person.
‘While government obviously can’t guarantee that equity release mortgages will be made available in Guernsey or compel providers to offer them, what we can do is ensure that there are no barriers to doing so, which is what this ordinance does,’ said Deputy de Sausmarez.
‘We’ve had assurances from industry that there is appetite for this kind of product.’
The GFSC spokeswoman said it remained open to discussions ‘and to receiving licence applications from prospective equity release providers and advisers who are interested in operating in the Guernsey market.
‘To date, we have not received any such applications.’
You need to be logged in to comment.