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HM Treasury - Yvette Cooper launches consultation on protective measures for vulnerable homeowners

The Government is proposing that companies offering sale and rent back agreements, which may target homeowners facing repossession, should be brought within the scope of Financial Services Authority (FSA) regulation. The consultation sets out the details of the proposed legislation and will close on 1 May 2009. The FSA has published a separate consultation alongside on the detail of its proposed new regime, available at: http://www.fsa.gov.uk/Pages/Library/Policy/CP/index.shtml

The consultation follows an Office of Fair Trading (OFT) market study published at the end of last year, which looked at the impacts of the growing sale and rent back market. The OFT report identified that there are a number of risks to homeowners entering into these arrangements and made three recommendations to Government, including compulsory regulation, increasing consumer awareness and improving information about housing benefits.

The Government accepted the OFT's recommendations. Its proposals today include a two-stage approach to regulation, in order to ensure consumers are protected as quickly as possible in the current market environment. Subject to the outcome of consultation and Parliamentary approval, the Government is proposing that the FSA puts in place an interim regime by July 2009. The FSA will put in place its full regulatory regime following consultation and the publication of its final rules. The launch of the consultation today follows action taken by the OFT last week asking 16 sale and rent back providers to substantiate claims made in their adverts.

The Government's proposals build on the comprehensive package of support for homeowners facing financial difficulties.

The Chief Secretary to the Treasury, Yvette Cooper, said:

"Many people are worried about their homes and their mortgages right now. Unscrupulous companies must not be allowed to exploit people when they are vulnerable with dodgy deals that end up pushing people out of their home. The OFT found some shocking cases. That's why in this consultation the Government is proposing tough new regulation to give vulnerable homeowners better protection when they need it"

 


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