CML news & views

Lenders welcome yesterday’s announcement by the Financial Services Authority (FSA) of a package of measures to protect vulnerable consumers in the sale-and-rent-back market.

We supported the FSA’s decision earlier this summer to introduce interim regulation of the sale-and-rent-back sector, under which firms must be authorised or face penalties including fines and imprisonment. 

And yesterday, the FSA said that, when the full regulatory regime comes into force at the end of June next year, exploitative advertising and high-pressure sales techniques will be banned. The FSA also said that at that stage the rules would include:

• a cooling-off period to give consumers more time to make decisions;
• a ban on cold calling and the dropping of promotional leaflets through letter boxes;
• a ban on the use in promotional literature of terms like “fast sale,” “mortgage rescue” and “cash quickly;”
• measures to reinforce security of tenure; and
• a requirement that in every sale firms must check that the customer can afford the deal and that it is right for them.

The FSA’s detailed proposals are set out in its consultation paper Regulating sale-and-rent-back - the full regime. We will look at them in detail but they appear to seek to uphold for the sale-and-rent-back sector the higher standards and levels of consumer protection that already apply in the mortgage industry.

We will consult with members and respond to the paper in due course. At this stage, however, we welcome the FSA’s aspiration to have a sale-and-rent-back market in which:

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