FSA Introduces Interim Regime for SRB

The long-awaited interim regime for SRB – sale and rent back – schemes, introduced by the Financial Services Authority (FSA) came into force on Tuesday, June 1st.   The regime offers protection to homeowners, who have reportedly faced potential hazards of the SRB schemes and even lost their homes and significant sums of money. Starting from June 1st, all companies that wish to operate in the sector of Sale and Rent back have to apply for interim authorisation by sending completed applications prior to August 1st. Firms that fail to meet the deadline will not be allowed to operate in the sale and Rent Back sector until June 30th, 2010, upon this date, the interim regime will be over and the full regime will start. Companies that currently have the authorisation of the Financial Services Authority for other activities, yet seek to enter the market of sale and Rent Back still have to send their application in order to acquire an interim variation of permission. It should be noted that the Financial Services Authority plans to closely monitor the SRB market, which means that all companies have to get permission. It should be remembered that activity on the sale and rent back market without permission is considered a criminal offence and will result either in imprisonment or in a substantial fine, or both. Additionally, FSA sanctions apply. All homeowners have to make sure that they only deal with authorised firms, which means that they will be protected from illegal ones. All authorised companies will have to meet the requirements of treating consumers fairly; in addition, consumers dealing with authorised firms will have access to procedures of complaining, such as the Financial Ombudsman Service. Consumers should remember that even the interim regime does not protect them against such unpleasant consequence of the Sale and Rent Back scheme as the below-market value price paid for the property and the potential inability for them to stay in the house as a tenant for a long time.