FSA to ban high-pressure sales in SRB market
Share
The FSA has today published its proposed rules and guidance for the sale and rent back market, with an interim regime to be introduced as soon as legislation comes into force that gives the FSA power to regulate the sector.
The FSA says it will ban exploitative advertising and high-pressure sales techniques and prohibit the use of emotive terms like “fast sale”, “mortgage rescue” and “cash quickly” in promotional literature.
It will also introduce a 14-day cooling-off period, ban cold calling and prohibit firms from dropping promotional leaflets through letter boxes.
The FSA has confirmed rules to ensure consumers have a security of tenure for a minimum of five years and will introduce an affordability and appropriateness check across all sales to check that the sale and rent back deal is right for the consumer.
The FSA has also published proposals for the data it will expect firms to supply for use in the supervision of sale and rent back firms.
It is implementing the interim regime from July 2009, with the full regime coming into force from June 30, 2010.
FSA head of mortgage policy Ed Harley says: “For some people in financial difficulty, staying in their home remains very important. Selling their home and renting it back in this way can be right for them.
“But we are aware of some firms exploiting vulnerable consumers at a difficult time. So, it is right that we introduce these further protections, and we will take swift action where they are not met.”
The Financial Services Consumer Panel chairman Adam Phillips says: “The FSA must police this area thoroughly. We still have worries that firms will try to exploit consumers both within the rules and by trying to operate outside the rules.
“The fact that only around 80 firms have applied for FSA authorisation, when the OFT had judged that there were over 1000 firms undertaking sale and rent back, means the FSA must watch the authorisation boundary carefully. The Consumer Panel has real concerns about this particular product and will continue to monitor the situation.”
If you enjoyed this article, sign up here to receive daily email updates from Money Marketing and Follow @_moneymarketing
