DomaCom announced today (14 September) that the Australian Securities and Investments Commission (ASIC) has in principle approved the relief of its “innovative” senior equity release offering.
According to the company, ASIC’s conditional approval will “pave the way for the introduction of a new suite of products… focused on the needs of ageing retirees to adequately fund their retirement”.
Arthur Naoumidis, CEO at DomaCom, said: “With surveys showing that Australians are among the world’s most worried about retirement, our Senior Equity Release product has the potential to be a meaningful solution to one of the most intractable challenges facing our economy — the difficulty many Australians have in funding their retirement.
“Many retirees are asset rich and cash poor; this product will enable them to unlock the value of their home while also giving them control and the ability to remain living in their home.”
DomaCom aims to release the product in the first quarter of 2018, provided that the formal ASIC relief is granted.
The result of a four-and-a-half-year process with ASIC, the offering will be a financial product with which a Product Disclosure Statement will be issued.
Potential customers will be required to engage with a financial planner for advice. The product may also require clients to obtain legal advice.
DomaCom said: “The DomaCom Senior Equity Release product will have a number of important protections for retirees, including providing security that they can remain in their home as long as they wish as well as providing the right to repurchase the equity that has been sold should the retiree change their mind.”
Mr Naoumidis added that financial planners will be able to use the product to not only manage the cash flow needs of retired clients but also to facilitate the intergenerational transfer of wealth.
He said: “This is a key milestone for DomaCom, paving the way for a series of new products based on the equity release concept and with the potential to significantly build funds under management.
“We believe demand for a product of this nature is enormous and the range of available alternative products continues to decrease.”
ASIC recently released its 2017–18 to 2020–21 Corporate Plan, which detailed plans to impose greater scrutiny on reverse mortgage products and selling practices. Reverse mortgages are considered by ASIC as a type of equity release.
The regulator said that it would “focus on the practices of financial product and service providers that may lead to poor outcomes for investors and consumers, including vulnerable consumers”.
In the months leading to ASIC’s announcement, a number of lenders including Macquarie and Westpac withdrew reverse mortgage offerings from the market, while others like Auswide Bank tightened up lending requirements on equity release products.