The Government has set out plans so sale and rent back firms cannot use pressure tactics to try and ensnare people into losing their homes.

The Financial Services Authority, the Government’s watchdog, says exploitative advertising and high-pressure sales techniques by sale and rent back firms will be banned by 2010.

Sale and rent back is the scheme whereby people who simply cannot afford to keep their mortgage sell their property, pay their debts and then rent it back from the firm. The practice has been regulated by the FSA, but it is now making sure no vultures use pressure to get people to sell up.

The new proposals will include giving people a cooling-off period to give consumers more time to make decisions,
banning firms cold calling and prohibiting firms from dropping promotional leaflets through letter boxes.

The FSA will also be prohibiting the use of emotive terms like ‘fast sale’, ‘mortgage rescue’ and ‘cash quickly’ in promotional literature – it wants to make sure people have considered every other avenue before they make such a desperate decision.

Ed Harley, FSA head of mortgage policy, says: “Sale and rent back can be the right solution for some consumers, but many of the people typically targeted are financially vulnerable and have been badly hit by the experience. The FSA’s proposed new rules will help to protect consumers.

“We want to prevent high-pressure and inappropriate sales, and help consumers understand sale and rent back products, so they only enter into sale and rent back where it is an appropriate and sustainable solution for them.”

SOURCE: FSA, 28/09/09

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