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FSA publishes interim regulations for sale and rent back

The FSA has published details of the interim regulations for the sale and rentback market that it is introducing on July 1.

It follows news yesterday that the Treasury is extending the scope of FSA regulation to include SRB.

An interim regime will come in as soon as any statutory changes come into force, which are expected on July 1, followed by a more comprehensive regime which will start on June 30 2010.

Under the interim regime, firms will need to meet FSA threshold conditions including the requirement to have adequate resources and to be run by fit and proper people.

Firms will also have to comply with the principles for businesses and meet a number of systems and controls and conduct of business rules.

Companies that are currently unauthorised and that intend to carry on any of the new SRB regulated activities after the commencement of the interim regime will need to apply for interim permission.

Similarly, firms that are currently authorised for other activities will need to apply for interim variation of permission.

The FSA is encouraging firms to start preparing now for authorisation and to apply as soon as the interim regime starts.

FSA head of mortgage policy Ed Harley says: “We know that some consumers enter into sale and rent back arrangements without understanding the costs and risks involved.

“This can be a source of real distress for people in already difficult circumstances.

“Firms entering our regime will need to run their business in a way that means customers are treated fairly.

“This includes making clear to customers important details, such as the length of time they can stay in the property, before they enter into the arrangement.”

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