The FSA has released its final rules for firms engaged in Sale and Rent Back (SRB) activity. From 30 June 2010 no firm may engage in sale and rent back activity, including the administration of ongoing schemes, unless they have been granted a permission by the FSA under the full regime. This means that firms who had permission under the interim regime must also stop all activity unless they also obtained a full permission.
The new rules limit the advertising and sale of SRB schemes banning the use of certain wording in advertising (eg. ‘mortgage rescue’), the use of cold calling and high-pressure selling techniques and also introduce a 14-day ‘cooling off period’.
The regime imposes a set method of valuing the property, with a standard letter of instruction to a surveyor instructed jointly by the parties, and a series of requirements to ensue full disclosure.
There are limitations on the type of tenancy that can be granted with the term not permitted to be less than 5 years and the rights of the lender to recover the property for breach heavily restricted.
This is a positive step forward but it has taken a long time to appear.
Filed under: England & Wales, FSA, sale and lease back
The Financial Services Authority has released more details of its plans to regulate the sale and rent back sector. In the downturn this sector has grown substantially and unscrupulous lenders have excited the interest of the Office of Fair Trading and HM Treasury due to a lack of good information being given to consumers. This is an interim regime and will ultimately be replaced by a full regime which is expected to come into operation on 30 June 2010.
Unauthorised firms operating in the sale and lease back sector will now need to seek authorisation from the FSA. The scheme is expected to come into operation on 1 July 2009 and firms will have until 1 August 2009 to seek authorisation. Already authorised firms will need to apply for a variation of permission to allow them to continue to operate.
Firms wishing to apply for authorisation should look at this page on the FSA website which contains information to assist with an application including the type of information that will need to accompany the application. The FSA states that the page will soon also contain draft application forms.
Filed under: Uncategorized, FSA, regulations, sale and lease back