New rules on sale-and-rent back

Permalink: New rules on sale-and-rent back
by Gill Montia

The Financial Services Authority (FSA) has published new rules and guidance aimed at protecting vulnerable consumers in the sale-and-rent-back market.

The regulator implemented an interim regime in July of last year and the latest publication contains details of the full regime, which comes into force from 30th June 2010.

In particular, the FSA has:

Banned exploitative advertising and high-pressure sales techniques and prohibited the use of emotive terms like “fast sale”, “mortgage rescue” and “cash quickly” in promotional literature.

Introduced a 14 day cooling-off period to give consumers more time to make decisions on sale-and-rent-back.

Banned cold calling and prohibited firms from dropping promotional leaflets through letter boxes.

Confirmed rules to ensure consumers have a security of tenure for a minimum of five years.

Introduced an affordability and appropriateness check across all sales to check that the sale-and-rent-back deal is right for the consumer.

Put in place measures to ensure all risks are clearly signposted to the customer, via FSA literature and during the sales process.

The regulator’s head of mortgage policy, Ed Harley, says: “We are aware of some firms exploiting vulnerable consumers … so, it is right that we introduce these further protections, and we will take swift action where they are not met.”

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 and encourages home owners to call 0300 500 5000 immediately if they are aware of firms that trade without being authorised.