The clampdown on the controversial deals – in which a company purchases a home and the vendors then rent it back – is likely to see money being repaid to some consumers who entered into the arrangements as they struggled to pay their mortgages.
One company that had been active in the market has been referred to the FSA's enforcement division after being found to have engaged in fraud.
The FSA's review of the market found companies "more focused on their own commercial success rather than their customers' welfare". (AtW's comment: what did FSA expect?)
Nausicaa Delfas, the FSA's head of mortgage and general insurance supervision, said: "Sale and rent back is often the last resort for struggling homeowners so we expected to see firms treating their customers much better than this report suggests. The resulting temporary closure of this market could have been avoided if sale and rent back firms had taken the time to fully understand their regulatory responsibilities and customers' needs."
The FSA reviewed 22 companies operating the schemes. One was referred for enforcement, while the others have either stopped taking on new business or have decided to cancel their FSA authorisation.
Five have agreed to undertake reviews of past business. The FSA said these could result in "consumer redress".
Some sale and rent back schemes have targeted financially distressed homeowners including those facing repossession, allowing the businesses to purchase homes at knockdown prices.
One company, as yet unnamed by the FSA, was reported to have been inflating the price it had purchased homes for in order to defraud lenders.
The FSA also found that companies had not "correctly assessed appropriateness and affordability" of deals; agreements contained incorrect information; sale processes were inadequate; and financial promotions breached FSA guidelines.
Ms Delfas said: "It seems most were more focused on their own commercial success rather than the welfare of the customers, with one firm even resorting to fraud. This is an example of the type of action that the FSA, and in future the FCA, will increasingly be taking to protect consumers."
The FSA said consumers concerned over sale and rent back deals they may have taken up should contact their provider in the first instance or seek professional advice. The regulator said it would be working with the companies reviewing historical work to ensure customers are treated fairly.
Source: Sale and rent back market shut down after regulator's review - Telegraph
One company that had been active in the market has been referred to the FSA's enforcement division after being found to have engaged in fraud.
The FSA's review of the market found companies "more focused on their own commercial success rather than their customers' welfare". (AtW's comment: what did FSA expect?)
Nausicaa Delfas, the FSA's head of mortgage and general insurance supervision, said: "Sale and rent back is often the last resort for struggling homeowners so we expected to see firms treating their customers much better than this report suggests. The resulting temporary closure of this market could have been avoided if sale and rent back firms had taken the time to fully understand their regulatory responsibilities and customers' needs."
The FSA reviewed 22 companies operating the schemes. One was referred for enforcement, while the others have either stopped taking on new business or have decided to cancel their FSA authorisation.
Five have agreed to undertake reviews of past business. The FSA said these could result in "consumer redress".
Some sale and rent back schemes have targeted financially distressed homeowners including those facing repossession, allowing the businesses to purchase homes at knockdown prices.
One company, as yet unnamed by the FSA, was reported to have been inflating the price it had purchased homes for in order to defraud lenders.
The FSA also found that companies had not "correctly assessed appropriateness and affordability" of deals; agreements contained incorrect information; sale processes were inadequate; and financial promotions breached FSA guidelines.
Ms Delfas said: "It seems most were more focused on their own commercial success rather than the welfare of the customers, with one firm even resorting to fraud. This is an example of the type of action that the FSA, and in future the FCA, will increasingly be taking to protect consumers."
The FSA said consumers concerned over sale and rent back deals they may have taken up should contact their provider in the first instance or seek professional advice. The regulator said it would be working with the companies reviewing historical work to ensure customers are treated fairly.
Source: Sale and rent back market shut down after regulator's review - Telegraph
