New legislation for the reverse mortgage industry would enshrine in law many standards already applied by the industry body.

Under the draft legislation of phase two of the NCCP, released Friday, reverse mortgage holders would be protected against entering negative equity. The regulation echoes industry body SEQUAL's code of conduct.

The exposure draft has also called on reverse mortgage providers to conduct additional responsible lending inquiries over and beyond those already required by NCCP. The inquiry obligations include using an ASIC-approved website to generate projections showing borrowers the effect of a reverse mortgage on their equity over time, providing customers with a reverse mortgage information statement and notifying borrowers of potential impacts to pension entitlements and tax.

The additional inquiries put forth in the exposure draft once again reflect SEQUAL's existing code of conduct. SEQUAL CEO Kevin Conlon previously told Australian BrokerNews he expected regulations of the reverse mortgage industry to be little more than a "health check" which would codify the industry's self-imposed requirements.