FSA clamps down on sale and rent back
By Bridging Loan Directory -
The FSA is to extend the regulation of sale and rent back (SRB) agreements to all providers, in an effort to clamp down on the “considerable” number of unregulated transactions still taking place.
The FSA’s quarterly consultation paper proposes that, in line with Treasury proposals, anyone offering sale and rent back agreements will be regulated regardless of whether such transactions form a firm or investor’s main source of business.
The FSA has regulated SRB since 2009, but only people that did SRB “by way of business” fell under its remit, enabling many to avoid regulation.
The changes mean that even if a firm or individual does just one SRB agreement or acts as a provider for a friend, they will be viewed by the FSA as engaging in regulated activity and require authorisation.
However, it will not apply if the SRB is provided by a relative.
An FSA spokesperson said: “The change closes the gap in regulation and is a step forward for consumer protection.”
At the moment, small firms and investors that are active SRB providers are avoiding regulatory requirements by claiming they do not carry out SRB by way of business, the FSA said.
The FSA said in the paper: “We are concerned that a considerable number of unregulated SRB transactions are happening, which means some homeowners are still exposed to the same potential detriment identified by the 2008 Office of Fair Trading report.”
Comments on the consultation paper must be submitted by 6 November 2011, with final rules likely to be published and implemented around three months later.