EuroDebt welcomes additional protection for sale and rent back customers

29th January 2010

The Financial Services Authority (FSA) has published new rules and guidance to protect indebted homeowners in the sale and rent back (SRB) market.

Kevin Still, Director of debt solution specialist EuroDebt commented; "This builds on the interim regime from 1 July 2009 and will provide greater protection for mortgagees from 30 June 2010. We welcome confirmation of the rules to ensure consumers have a security of tenure for a minimum of five years and that an affordability and appropriateness check has been introduced.

"Sale and rent back can be a viable alternative for homeowners facing re-possession and struggling with other debt problems. EuroDebt does recommend some clients to see a properly authorised sale and rent back advisor where the circumstances look appropriate alongside a debt solution to deal with their unsecured debt. The sale and rent back advisor ensure all risks are clearly signposted to the customer, through FSA literature, during the sales process."

In particular, the FSA has additionally:

• banned exploitative advertising and high-pressure sales techniques and prohibited the use of emotive terms like ‘fast sale’, ‘mortgage rescue’ and ‘cash quickly’ in promotional literature
• introduced a 14 day cooling-off period to give consumers more time to make decisions on sale and rent back
• banned cold calling and prohibited firms from dropping promotional leaflets through letter boxes

Ed Harley, FSA head of mortgage policy, said:

"For some people in financial difficulty, staying in their home remains very important. Selling their home and renting it back in this way can be right for them. But we are aware of some firms exploiting vulnerable consumers at a difficult time. So, it is right that we introduce these further protections, and we will take swift action where they are not met."

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