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Financial Advice, Differentiated Consumers, and the Regulation of Equity‐release Transactions
Author(s) -
Fox O'Mahony Lorna,
Overton Louise
Publication year - 2014
Publication title -
journal of law and society
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.263
H-Index - 48
eISSN - 1467-6478
pISSN - 0263-323X
DOI - 10.1111/j.1467-6478.2014.00677.x
Subject(s) - equity risk , equity capital markets , business , equity (law) , finance , club deal , private equity fund , population , economics , public economics , private equity , political science , law , demography , sociology
In an asset‐based welfare context, which encourages the drawdown of housing equity to meet financial needs in later life, it is anticipated that the use of equity‐release products will become increasingly prevalent. In the last decade, and reflecting the strategic significance and high risk associated with this section of the home finance market, targeted equity‐release products (lifetime mortgages and home reversion plans) have come under the regulatory remit of the Financial Conduct Authority (FCA). The FCA's approach to equity release is geared around professional financial and legal advice. Drawing on findings from a new qualitative study, purposively sampled according to socioeconomic circumstances at the time of the transaction, this article explores the role of financial advice within the factors that shape equity‐release decision making, and considers the implications of the FCA's regulatory commitment to the ‘advice paradigm’ in meeting (or not) the needs of a differentiated consumer population.