FSA Regulation Sees Sale-and-Rent Back Rogues Facing Fines & Even Jail

Earlier this month the FSA introduced the first stage of its interim regulation governing the Sale-and-Rent Back (SRB) sector. The FSA are warning organisations which have not received permission to operate in this sector that they could face jail and a significant fine.

The new regulation is the first of many stages to be rolled out, which will help to protect homeowners from serious financial loss and prevent them from losing their homes.

Organisations intending to operate in the SRB sector have until the beginning of August to apply for an interim authorisation; Organisations who don’t apply by the deadline will not be able to operate in the sector during the interim regime. The interim regime lasts until 30th June 2010, at which point the full regime will then kick-in.

SHIP Welcomes the FSA’s Stance on SRB’s

The Director General of the equity release trade body SHIP, Andrea Rozario, welcomed the launch of Sale-and-Rent Back regulation:
“SHIP welcomes the launch of the first stage of sale and rent back (SRB) regulation. This is something that we have been urging the Government to adopt for several years now and we believe this move will benefit consumers greatly.

“In the past, we have been very concerned about the lack of information given to customers about the practicalities and risks associated with SRB products. However, with the current economic downturn, it is inevitable that more and more consumers are looking to their housing equity to relieve financial pressures.

“Therefore, we hope that today is the first step towards providing a safe regulated environment whereby consumers can make an informed choice as to whether SRB is right for them and have some protection should they proceed.”

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Important things to consider about equity release:

• Equity release could affect your current or future entitlement to means-tested benefits
• Releasing equity to spend in your lifetime can reduce the amount that is left in your estate when you pass away

Related posts:

1. Financial Services Authority to Regulate Sale and Rent Back Schemes
2. Confusion between sale-and-rent-back and equity release
3. Equity Release News Roundup - July 2009