Report Warns Consumers On Unauthorised Sale & Rent Back Firms

More than half of firms who are advertising sale and rent back schemes via the internet have not have obtained the required Financial Services Authority authorisation says report

Specialist compliance consultancy firm, Advzr Ltd, has today warned consumers to be careful in their selection of Sale & Rent Back (SRB) firms after it issued a report showing that more than half of firms advertising SRB schemes might not have the correct FSA authorisation.

The report, which focussed on firms which advertise sale and rent back schemes via the internet, had the following key findings:

• A large proportion of firms that are apparently active in the SRB market do not have the required FSA authorisations. Over half of all firms with prominent search engine positions or sponsored search engine links relating to Sale & Rent Back could not be confirmed as authorised;
• The presentation of SRB schemes on interim authorised SRB firm’s websites was not sufficiently balanced. No mention of the disadvantages of SRB schemes was made in the majority of interim authorised SRB firms’ sites;
• In a small number of cases the websites of interim authorised firms indicated practices that were directly contrary to the rules and which might be harmful to consumers. Examples included very short timescales being provided for customers to consider below market value offers for their homes, and content discouraging consumers from seeking independent legal or other professional advice.
• The rules relating to regulatory disclosure had mainly not been followed by interim authorised firms who had chosen to mention their regulated status.   

Advzr Director Martin Sykes said

“We are still in the very early days of FSA regulation for SRB firms.

Our findings suggest that a large proportion of firms who are active in the SRB market have not obtained the required authorisations under the interim regime. This issue will no doubt dissipate as FSA move to enforce the regulatory perimeter. But consumers should be very careful in the short term to ensure that any SRB firm that they are dealing with is properly authorised.

Some progress has been made by interim authorised SRB firms, but many don’t yet appear to have got to grips with the depth and detail of the FSA rules. This is understandable given the speed of the implementation of the new regime.

SRB firms should now move quickly to ensure that they are directing sufficient resources to embedding the new regulatory regime. Otherwise invasive FSA action is likely. ”

The full report is available to download via the “Press & Reports” page of the Advzr website www.advzr.com or by e-mailing [email protected].

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Notes to editors

1. Advzr Ltd is a specialist consultancy firm providing regulatory compliance and marketing services for financial advisers, mortgage brokers and other FSA regulated firms. It provides a range of free compliance materials for SRB firms via its website www.advzr.com

2. Sale and Rent Back (SRB) schemes involve homeowners selling their properties at a discount to the market value. In exchange they are provided with an option to remain in the property as tenants. SRB is primarily used as a solution for financially stressed individuals and as a means to avoid repossession.

3. The FSA interim regulatory regime for SRB firms began on 1 July 2009. Firms participating in the market had until 1 August to apply for interim authorisation. The full regime is timetabled for implementation by the end of June 2010.

4.SRB was brought within FSA regulation following a recommendation from the Office of Fair Trading in October 2008. The OFT expressed concerns about the suitability of sales of SRB schemes and about the contract terms they utilised.

5. Advzr is based in Huddersfield at Advzr Ltd, The Offices, Castle House Farm, Huddersfield, HD4 6TS. www.advzr.com 01484 660156

6. For more information call Martin Sykes 01484 660156 or e-mail [email protected].

7. Photos are available on request.

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