It proposes a cooling-off period, banning cold calling, prohibiting firms from dropping promotional leaflets through letter boxes and prohibiting the promotional use of emotive terms like “fast sale”, “mortgage rescue” and “cash quickly”.
The regulator is also proposing that consumers have security of tenure and the introduction of a requirement that in every sale firms check that the consumer can afford the deal and it is right for them.
The proposals are due to come into effect on June 30, 2010, building on the FSA’s interim regulation which started on July 1, 2009.
The FSA says the proposed expanded regime is designed to ensure an SRB market where firms are fit and proper and appropriately resourced and firms’ staff are competent to carry out their role.
It also wants to ensure that consumers get “clear, concise and consistent information about a firm’s services and products” so they can make informed choices and have appropriate protection if things go wrong.
FSA head of mortgage policy Ed Harley says: “Sale and rentback can be the right solution for some consumers, but many of the people typically targeted are financially vulnerable and have been badly hit by the experience. The FSA’s proposed new rules will help to protect consumers.
“We want to prevent high-pressure and inappropriate sales, and help consumers understand sale and rent back products, so they only enter into sale and rent back where it is an appropriate and sustainable solution for them.”
The consultation period ends November 30, 2009.