FSA cracks down on high-pressure rent back sales

High-pressure sales techniques and exploitative advertising by sale & rent back companies will be banned under a new FSA regime.

The FSA implemented interim rules for the sector on 1 July 2009 to tackle the most immediate issues for consumers as quickly as possible but has now published details of the full regime which will be implemented from 30 June 2010.

In the regime, the FSA has 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.

It has introduced a 14 day period to give consumers more time to make decisions on sale and rent back. Cold calling and the dropping of promotional leaflets through letter boxes have been outlawed.

Rules which ensure consumers have a security of tenure for a minimum of five years have been introduced as well as affordability and appropriateness checks across all sales.

Finally, measures have been put in place to ensure all risks are clearly signposted to the customer through FSA literature and during the sales process.

The FSA has also published proposals for the data it will expect firms to supply for use in the supervision of sale and rent back firms.

Ed Harley, head of mortgage policy at the FSA, says: "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."