Legislative Council Hansard
Wednesday 31 October 2007
Mr FINCH (Question) - Mr President, my question is to the Leader. Is the State Government monitoring the concerns of some older members of the community over the so-called equity release strategy for retirees known as reverse mortgages and, if so, has it recorded any cases of false advertising or financial hardship? Would the Government consider legislation or regulation to protect older Tasmanians from unscrupulous dealings? The West Tamar Seniors Advisory Group has suggested regulation so that reverse mortgages may not be advanced without certification from a reputable financial adviser that the product is in the recipient's best interests. Is the Government prepared to consider this?
Mr PARKINSON - I thank the honourable member for his question. The Office of Consumer Affairs and Fair Trading has not reported any cases of false advertising or financial hardship in Tasmania in relation to reverse mortgages. In Tasmania, consumer credit is regulated by the Consumer Credit (Tasmania) Act 1996. This act adopts the uniform credit law which is consistent across Australia and administered by the Ministerial Council on Consumer Affairs - the MCCA.
Uniform law regulates all credit products including personal loans, credit cards and mortgages. The MCCA is responsible for administering the scheme and is currently monitoring the development of reverse mortgages in the market. Proposals are currently being considered nationally to improve the disclosure of information for reverse mortgage products, particularly in relation to the risk of negative equity where the borrower ends up owing more than the value of the house. A number of credit providers now offer a no negative equity guarantee. This guarantee is that a person can continue to live in a property even where there is limited equity remaining in the property.
The Australian Securities and Investment Commission is also interested in reverse mortgages and has a comprehensive guide and calculator available at www.fido.gov.au. Consumers may decide to release equity in property in a number of ways, such as taking out secured loans or selling property. Financial advisers can provide useful advice to consumers but it would not be appropriate that they have a statutory role in deciding whether a certain product is in the consumers' interest. Consumers need relevant information to enable them to make their own informed choices about credit