FSA action on "shoddy" sale and rent back advice
In a move welcomed by the consumers' organisation Which?, the Financial Services Authority (FSA) has said that most 'sale and rent back' agreements are unsuitable or unaffordable
After investigating the sale and rent back (SRB) market, an FSA report has shown that consumers should not have been sold the majority of SRB schemes
and that redress must be made for substandard sale and rent back advice.
Sale and rent back firms offered people the opportunity to sell their houses (for a discounted price) and remain in the property as tenants.
However, not only do homeowners receive far less than the true value of their homes
, but most SRB operators offer no rental guarantees
other than standard assured shorthold tenancy periods. For this reason, homeowners can still be forced to move out sooner
Which? chief executive, Peter Vicary-Smith, welcomed the news of the FSA's temporary shutdown of the market
and that the watchdog has acted to stop people falling prey to "shoddy" sale and rent back schemes.
"Which? exposed the shortcomings of this market last year, after our own investigation uncovered woefully inadequate advice," said Mr Vicary-Smith. "This is exactly the type of strong, proactive action we're calling for from the new financial regulator in our 'Watchdog not Lapdog' campaign."
"We now want to see redress for those consumers who have been given poor advice by SRB companies, and for this to happen quickly."