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SHERPA Welcomes Review of Home Equity Conversion

Media Statement – For Immediate Release 2 November 2006

SHERPA Welcomes Government Review of Home Equity Conversion Schemes

The Safe Home Equity Release Plans Association (SHERPA) welcomes the government initiative announced by the Minister of Senior Citizens to review the regulatory environment for “Home Equity Conversion” schemes.

Rob Dowler, Executive Secretary of SHERPA, stated that the discussion paper released by the Office of Senior Citizens on 1 November is broad in its scope but that this is appropriate for an industry still in its formative stage. “Consideration of regulatory issues this early in the development of the industry will help progress towards meeting SHERPA’s goal of enhancing consumer protection.”

Dowler states that consumers can already identify on the SHERPA website ( www.sherpa.org.nz ) those providers who, as members of SHERPA, have committed to a Code of Practice to promote safe home equity release plans. Member compliance with the Code is independently assessed and reconfirmed annually. The Code already covers issues raised in the government discussion paper, including:

* Lender
o Unable to recover more than the net sale value of the property (No negative equity)
o To offer external dispute resolution

* Borrower
o Required to seek independent legal advice
o Encouraged to seek independent financial advice
o Encouraged to discuss the loan with family

SHERPA is a new industry body with two member companies, Sentinel and Bluestone, but Dowler states that there are active discussions currently being progressed with other industry participants and he expects membership to grow quickly. Dowler concluded with, “Some industry participants have questioned whether there will still be a need for SHERPA once the government regulates the industry, but overseas and local experience suggests there will still be a place for an independent industry body.”


ENDS

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