Sale and rent back market shut down by FSA
Friday, 3 February 2012 2:36 PM
The Financial Services Authority (FSA) has shut down the sale and rent back market after concluding that most deals were unsuitable and should never have been sold.
Under the deals, home owners struggling with the mortgage could sell their property to a company which would rent it back to them.
The FSA reviewed the sales practices of all regulated sale and rent back firms and found failings including:
- Failing to consider affordability and not giving customers enough time
- Giving incorrect information
- Financial promotions that breached FSA rules
- Inadequate training and record keeping.
It has now referred one firm to its enforcement division whole others have either stopped taking new business or cancelled their permissions. Effectively this means the entire sale and rent back market is temporarily shut.
Nausicaa Delfas, the FSA's head of mortgage and general insurance supervision, said: "Sale and rent back is often the last resort for struggling homeowners so we expected to see firms treating their customers much better than this report suggests.
"The resulting temporary closure of this market could have been avoided if sale and rent back firms had taken the time to fully understand their regulatory responsibilities and customers' needs. It seems most were more focused on their own commercial success rather than the welfare of the customers, with one firm even resorting to fraud."
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