On 27 April 2006 the Financial Services Authority (FSA) published Consultation paper CP 06/8: Regulation of Home Reversion and Home Purchase Plans (HRs and HPPs). The consultation paper is accompanied by a full set of draft rules and guidance (mainly for the Mortgages: Conduct of Business sourcebook (MCOB) and the Perimeter Guidance manual).

The FSA already regulates lifetime mortgages, and HM Treasury consulted recently on proposed amendments to the Regulated Activities Order to enable FSA to regulate HRs, which are sale and lease transactions, to enable similar consumer protection for these previously unregulated products. Islamic "Ijara" HPPs, which are also sale and lease transactions, will also be regulated (Islamic "Murabaha" financing is already regulated under the mortgage regime).The necessary amendments to FSMA have already been made (for amendments to FSMA and the RAO see PLC Legal update, HM Treasury consultation on secondary legislation for the regulation of home reversion and home purchase plans).

CP 06/8 sets out the FSA's proposals for changes to the MCOB, in respect of HRs and HPPs, for the activities of: entering into the transaction as provider; adminstration; arranging (or bringing about), or making arrangements with a view to another person entering into, the transaction as occupier/purchaser or provider; advising on the merits of entering into or varying the transaction; and agreeing to carry on any of these activities.

Responses are requested by 21 July 2006.