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Sale and Rent Back Schemes

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Lucy Boldy, FSA Compliance Executive at Yorkshire Law firm Keeble Hawson underlined the need this week for Sale and Rent Back (SRB) firms to find out more about their responsibilities under a new regime, authorised by the Financial Services Authority (FSA).

On the 1st July this year SRB schemes that involve individuals selling their home - usually at a discount and obtaining an agreement to stay in the property for a set time, usually on a short hold tenancy - became a regulated activity.

The scope of the FSA regulation was extended to cover SRB following concerns that these arrangements had the potential to exploit vulnerable homeowners - Citizens Advice for example have been calling for regulation of SRB agreements since 2007.

Requiring authorisation by the Financial Services Authority (FSA) was only an interim measure however, as now full authorisation will have to take place.

Application forms are available now and the full regime is effective from 30th June 2010.

SRB firms are already subject to a suite of FSA rules covering employees, fees, dealings with customers, marketing, and how they manage their business.

Some of the rules are due to change in time for the new regime - all aimed at protecting consumers they include:

  • A prohibition on cold calling and dropping leaflets through letterboxes.
  • A cooling off period for consumers.
  • Prohibition on emotive language in promotional material, e.g. Mortgage Rescue.
  • Ensuring consumers' security of tenure.
  • SRB firms to be required to provide certain regulatory information to consumers.
  • Being regulated by the FSA also means being obliged to hold adequate capital resources and submit quarterly reports on business volumes and financials.

Lucy Boldy sums up:

"Businesses need to take advice on whether they should be authorised by the FSA - as a law firm we can also help with an application to become authorised and advise on the implications of being authorised and help clients to understand and follow the rules in order to remain authorised."

Lucy Boldy can be contacted on 0113 297 9575 or lucyboldy@keeblehawson.co.uk.

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