The Financial Service Authority's (FSA) interim regime for sale and rent back (SRB) schemes has come into force offering protection to homeowners in a market where there is the potential for consumers to suffer serious financial loss and in some cases lose their home.
Firms that intend to carry on operating in this market can apply for interim authorisation from today, and have until 1 August to submit their completed applications. Firms who do not apply by then will not be able to continue operating in the SRB market during the interim regime, which lasts until 30 June 2010, when the full regime will start.
Firms that are currently authorised by the FSA for other activities and who wish to undertake SRB business will need to apply for an interim variation of permission.
Undertaking SRB activities without permission is a criminal offence punishable by imprisonment and/or a substantial fine, in addition to FSA sanctions. The FSA will be closely monitoring the SRB market from today and will take action against firms it finds continuing to operate without permission.
Consumers should ensure that they only deal with authorised firms, who will be subject to our requirements including the requirement to treat their customers fairly, and where the consumer will have access to complaints procedures, including the Financial Ombudsman Service, if things go wrong.
Consumers should be aware of the risks involved in sale and rent back schemes. Normally they will be paid less than the full market value for their home and may not be able to stay as a tenant in the home in the long term.
Date: 1st, July, 2009
Author: Ben Wilkie
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