In October, the OFT announced their findings on the sale and rent back sector and called for regulation, a recommendation shared by Ship, regulated equity release providers and independent consumer champions.
The repeated use of the words ‘equity release’ in the advertising literature of many sale and rent back companies has lead to Ship’s sustained interest in the activities of the sector, and Ship has been campaigning to make sure that the unscrupulous practices of some sale and rent back agents does not reflect on the regulated equity release market.
Our two main concerns are that firstly, many websites are misleading because they fail to inform consumers up front the risks associated with entering into a sale and rent back scheme. Secondly, sale and rent back providers are making misleading comparisons with FSA regulated equity release products.
Ship has been working hard to distinguish the two main differences between regulated equity release and sale and rent back:
• Security of tenure: all regulated equity release products give policy holders the right to live in their homes for life, and;
• No monthly rent: equity release schemes do not require regular rent payments from policyholders.
Ultimately, people need to be able to understand the risks involved in a sale and rent back transaction, something that is not always the case currently. To support this, we have issued a “do’s and don’ts checklist” for anyone considering sale and rent back, available on our website.
One point not picked upon by the OFT that we consider vital to address is the issue of whether housing benefit would be available to anyone undertaking sale and rent back: we believe that many customers are given a false sense of security that Government housing benefit will be available should they be unable to meet rent payments, but this is not guaranteed to be the case.
At the moment the sale and rent back sector is growing unchecked and aspects of it could present a real danger to consumers. It is important that this sector is forced to offer clear information, and penalised if they do not.
For this reason we have sent a letter to the OFT, the Advertising Standards Authority and Trading Standards, outlining our concerns and seeking a meeting to discuss the situation. We believe that the reputable companies in the sale and rent back sector will welcome these recommendations, and work with the relevant authorities to create a regulated, safe sector.
Andrea Rozario is director general of Ship