Financial & Economic Blog

The Financial Services Authority (FSA) has set out a package of measures aimed at protecting vulnerable consumers in the sale and rent back (SRB) market. 

Exploitative advertising and high-pressure sales techniques will be banned under the new proposals, due to come into effect on 30 June 2010, which builds on the FSA’s interim regulation which started on 1 July 2009. 

The new proposals include:

• a cooling-off period to give consumers more time to make decisions;
• banning cold calling and prohibiting firms from dropping promotional leaflets through letter boxes;
• prohibiting the use of emotive terms like ‘fast sale, ‘mortgage rescue’ and ‘cash quickly’ in promotional literature;
• ensuring consumers have security of tenure; and
• a requirement that in every sale firms check that the consumer can afford the deal and it is right for them.

 The proposed expanded regime is designed to ensure an SRB market where:

• firms are fit and proper and appropriately resourced;
• firms’ staff are competent to carry out their role;
• consumers get clear, concise and consistent information about a firm’s services and products so they can make informed choices;
• consumers have time to consider the nature of the product and possible alternatives and to seek advice to help them reach a decision;
• consumers are sold suitable products that take account of their circumstances, needs, and affordability; and
• if things go wrong, consumers have appropriate protection.

Since the introduction of the interim regime SRB firms must be authorised otherwise they face the potential of fines or imprisonment. The FSA is proactively monitoring the SRB market for unauthorised activity, and will take action if necessary.