Consumers warned over Crossroads product offered by Asset Income Plan Ltd
Published ¤ 14/04/2011 11:40:50
The FSA have issued the following warning to people thinking about using their home to generate income, and in particular using a product known as Crossroads.
If you are considering using your property to generate an income, we advise you to be cautious about products that offer a "no cost" way of doing this. One such product we're aware of is called Crossroads.
Promotional material that we have seen claims that the product pays homeowners an annual income of 5% based on 50% of the value of their property for a set period of time - three and ten year periods have been mentioned. It says that to receive this income, the homeowner must allow an insurance company to take a legal charge on their property up to a maximum of 50% of its value.
You need to be aware that when a firm has a legal charge on your home, it means that they have rights over your property. The product information states that the only risk of you having to sell your home would be if the insurance company became insolvent and that this is reduced because the product is covered by capital risk insurance.
It is not clear if this is correct and whatever steps may be taken to reduce the likelihood of the firm carrying this out, your home may still be at risk.
The product information explains that Crossroads is not regulated under our rules. This might mean that its advisers and providers do not need to be authorised by us, although there is not enough information currently to confirm that.
But, if it is correct, you will not be covered under the Financial Services Compensation Scheme (FSCS) or be able to take any complaint to the Financial Ombudsman Service.
Who does it affect?
Homeowners seeking sources of income to fund their retirement, plus anyone over the age of 18 who owns their property outright.
What should you do next?
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