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FSA sets out regulations for Islamic mortgages

27th April 2006
By Staff Writer

The Financial Services Authority has set out its plans for the future regulation of home reversion plans (HRs) and home purchase plans (HPPs), also known as Islamic mortgages.

HPPs, also involving sale and lease arrangements, are one of the two methods of financing home purchase that are acceptable under Islamic law. The other is the Murabaha, which is already regulated under the FSA's mortgage regime.

The FSA's proposals are designed to ensure that people who wish to take out HRs and HPPs enjoy appropriate consumer protection comparable to that already in place for the equivalent products - Lifetime Mortgages and conventional mortgages.

The FSA's proposals seek to ensure that firms offering these products are competent to undertake the business and offer consumers clear, concise and consistent information about the services and products on offer, including appropriate risk warnings.

The FSA also wants to ensure that consumers get good quality advice and are sold suitable products which take account of their circumstances and needs.

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