If you live in Victoria you may recall the ‘Money for Living’ scam of 2005 where several hundred pensioners were fleeced by a former convicted fraudster operating a dodgy equity release scheme. ASIC have now successfully prosecuted the director, Gary O’Neill, and he recently pleaded guilty to two counts of dishonestly using his position as an officer of a company.
This is a great result for ASIC, and yet another illustration to senior consumers of why it is so important to deal with ONLY SEQUAL accredited introducers when seeking to release equity from their homes.
So how did this dodgy scheme work?
It went like this: Money for Living used the celebrity endorsements of Dawn Fraser & the actor Paul Cronin to aggressively advertise their scheme on TV as an alternative to reverse mortgages. Although it purported to release equity from people’s homes, it in fact required that applicant sell their home for less than market value to Money for Living, in return for a guaranteed monthly income and lifetime tenancy. A BIG no-no.
Money for Living failed to disclose the lifetime tenancy agreements to the lenders who took subsequent mortgages over the properties in question, and the whole thing fell over like a house of cards. At the time of this debacle in 2005, reverse mortgages were only just getting off the ground in Victoria and many people understandably confused this scheme with reverse mortgages and other legitimate forms of equity release, and the Victorian market has subsequently lagged behind the rest of the country as a result.
This scheme was completely different from conventional equity release. For instance, normal reverse mortgages are just loans that:
- Do not involve the sale of a property
- Do not require an change in ownership structure
- Are repaid from the future sale of the property
Hopefully this successful prosecution will now see Victorians use legitimate forms of equity release in greater numbers.