| FSA begins sale and rent back regulation |
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| 01 July 2009 | |
 The Financial Service Authority's interim regime for sale and rent back (SRB) schemes comes into force today, 1 July. It is designed to offer protection to homeowners in a market where there is the potential for consumers to suffer serious financial loss, and in some cases lose their home. The Office of Fair Trading (OFT) conducted a market study last year which found that sale and rent back deals had the potential to cause serious harm to homeowners who are often already in a vulnerable position. Firms that intend to carry on operating in this market can apply for interim authorisation from today, and have until 1 August to submit their completed applications. Firms that do not apply by then will not be able to continue operating in the SRB market during the interim regime, which lasts until 30 June 2010, when the full regime will start.
Undertaking SRB activities without permission is a criminal offence punishable by imprisonment and/or a substantial fine, in addition to FSA sanctions. The FSA says it will be closely monitoring the SRB market from today, and will take action against firms it finds continuing to operate without permission. It urges consumers to ensure that they only deal with authorised firms, which will be subject to the requirement to treat their customers fairly. The consumer will have access to complaints procedures, including the Financial Ombudsman Service, if things go wrong.
The FSA warns consumers that they should be aware of the risks involved in sale and rent back schemes. Normally they will be paid less than the full market value for their home, and may not be able to stay as a tenant in the home in the long term. Tag this article :     |
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