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20 | Regulation
Watchdog
warning
Claire Wilkinson, retail director at Compliancy
Services, and Julian Sampson, partner at
Wright & Wright Solicitors, both look at
why the FSA will be keeping a very
close eye on the sale and rent back
sector
Clare Wilkinson says: they
As with any area of the mortgage market that will
the FSA has within its sight, firms need to be need
fully aware of the regulator’s requirements. to
This is especially prevalent within a niche submit
sector and one perceived as being ‘high risk’. an
When I say ‘high risk’ this is the view from the application and
FSA regarding sale and rent back (SARB) and it wait for authorisation.
is this view that ensures the watchdog will be Firms which are currently authorised
keeping a very close eye on this particular for other regulated activities will be permitted
sector. to apply for a Variation of Permission (VPO) at treat
The SARB market has certainly made plenty any time. customers fairly. As
of headlines recently and obviously this Firms that have been granted interim I touched on earlier,
increased press coverage will help highlight the authorisation are subject to reduced rules and transparency of the sales process will be
issues facing firms especially in terms of requirements during this intervening period. key. Details such as; the length of time the
regulation. There are many challenges facing However, they should not delay and work vendors can stay in the property before making
this sector and high on the FSA agenda is a towards implementing the procedures, systems their final decision on whether to sell are vital
much more transparent sales processes and full and controls that will be required of any other in a robust and ethical proposition. Another
disclosure. There are not many detailed rules at authorised firm. These processes will need to important requirement of the new rules is that
present, but firms should not underestimate be firmly in place by the time they submit their a vendor must be given details of the market
the FSA's determination to ensure customers application for full authorisation next year. value as assessed by an independent and
are treated fairly. Whilst this deadline may seem some time away competent valuer i.e. RICS qualified.
there are obviously great benefits in ensuring Looking further at the specifics covered by
Interim permission that compliancy procedures are in place sooner regulation, firms trading in the SARB arena
The recent deadline of 1 August 2009 saw SARB rather than later. should ensure they are fully compliant in a
landlords and companies having to submit a Under the new FSA rules it is important to n
complete application for interim permission to underline that the SARB market has become a circle6
umber of areas, such as;
continue their SARB business activities. If this regulated activity and applicants have to circle6
Financial Promotions
deadline was missed, they cannot be active in demonstrate that they meet minimum circle6
Complaints; Training and Competency
the SARB market until the full regime comes standards and are ‘fit and proper’ persons. The circle6
Treating Customers Fairly
Sales Process, including procedures that
into force on the 30 June 2010, at which time regime will require that businesses continue to cover whether advice is being given
October 2009 Mortgage Introducer www.mortgageintroducer.com
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