Equity release, or home reversion plans, a market worth an estimated �250m a year, involves people over the age of 60 selling their home, or a percentage of their home, to a provider.

In return they receive a cash lump sum, or a monthly income, or a combination of both.

But as no mortgage is involved, the Financial Services Authority (FSA) has no power to act against firms which offer consumers a poor deal.

The Treasury has said the review, part of a wider look at the state of pensions, could mean the FSA will win the power to oversee the sector and ensure elderly people do not lose out.