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No
release for elderly from income plans
MORE than 10,000 pensioners are saddled
with debts that they can never hope to repay more than a decade after
being sold home income plans, consumer groups claim. Despite regulations against future mis-selling and a campaign to
secure compensation for victims, the home income sales scandal lives on. First introduced to the UK in 1972, the home income plan was
designed to unlock equity in an elderly person’s home. Unsafe schemes
flooded the market in 1988 and left many homeowners in difficulties. Home income plans were often backed by high-risk investment bonds
to provide borrowers with an income to pay off their mortgages. But
interest rates rocketed and the bond performance plummeted. Over the past decade the mortgage debt of thousands of pensioners
has more than doubled. Some elderly homeowners owe more than £200,000 in
interest on the loans. Some borrowers have received compensation but that has often been
swallowed by the outstanding debt as lenders continue to apply interest
charges. The Consumers’ Association wants lenders to freeze debts but
they have said no. Tony Craven, a retired medical representative from
Hull, has campaigned for 12 years on behalf of 10,000 people struggling
with debts. He said: “The home income plans were totally flawed and the
risk warnings were not properly explained. Some financial advisers selling
the high-income bonds were quoting returns of 40 per cent. The schemes
could never have worked.” Building societies including Halifax, West Bromwich, Chelsea and
Staffordshire sold tens of thousands before the plans were banned in 1990
by Fimbra, the regulator; £55 million has been paid in compensation by
the Investors’ Compensation Scheme to some 5,000 investors. Safe Home
Income Plans (Ship) was launched in 1991 to promote safe schemes.
Participating companies must observe a strict code. Copyright
© 2002 Global Action on Aging
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