Shares in retirement products firm Just Group (LON:JUST) surged on Thursday after the Prudential Regulation Authority (PRA) delayed the implementation of a new set of rules governing equity release mortgages by a year.
The regulatory changes are designed to usher in more stringent capital requirements around the calculation of the future value of homes in equity release mortgages.
READ: Just Group slumps as CFO steps down after delaying dividend amid regulatory uncertainty
The PRA said the implementation date for its equity release mortgage proposals would be delayed by at least a year. The consultation period for the initiatives closed on 30 September.
"Based on feedback to the consultation, the PRA has decided that the implementation date will not be before 31 December 2019,” the PRA said.
"The PRA is making this announcement now in order to clarify the position for insurers planning their year-end 2018 processes. The PRA is currently giving careful consideration to the consultation responses and the impact, if any, of the updated implementation date to the proposed phase-in period. The PRA will publish final policy and supervisory statements in due course."
The proposals were outlined in consultation paper 13/18 ‘Solvency II: Equity release mortgages’.
The implementation had been expected to take place by the end of 2018.
"Under the initial timescales, insurers would have had around one month to decide how to react and implement these actions for 31 December 2018 year end accounting period,” RBC Capital Markets analysts said in a note to clients.
“We view this as a very accelerated time scale which would not give sufficient time for insurers to fully explore their options. Therefore, an extension to 31 December 2019 is extremely positive, and will result in a more managed transition, which we expect will decrease the potential impact of the change,” they added.
Shares in Just Group were 13.7% up at 84.6p in mid-afternoon trade.
- Updated to add analyst comment -