Earlier this month, the government laid before Parliament secondary legislation to bring sale-and-leaseback agreements within the scope of regulation by the Financial Services Authority (FSA). We will scrutinise details of the regulatory regime, to be published shortly by the FSA. The timetable is tight, however, with the government pressing for regulation to take effect from 1 July, subject to Parliamentary approval.
We have been urging the government to introduce regulation of the sector as soon as possible. With an increasing number of borrowers now feeling the effects of the recession, mortgage payment problems are steadily rising – and a growing number of home-owners in difficulty may be considering sale-and-leaseback as a solution to their difficulties.
The government is therefore proposing a two-stage approach to regulation, with action this July followed by implementation of the full regime by the FSA in the second quarter of 2010. Full implementation will follow a consultation exercise, which we will take part in, and publication of the final rules.
Regulated lenders dealing with cases of arrears already have to fulfil specific requirements for borrowers and treat their customers fairly. But if those borrowers choose to deal with an unregulated sale-and-leaseback firm, they have a much lower level of protection.
In response to our lobbying for regulation of sale-and-leaseback, the Office of Fair Trading undertook a market study of the sector, published at the end of last year.
According to the former chief secretary to the Treasury, Yvette Cooper, the study found that “vulnerable home-owners were at risk from unscrupulous sale-and-rent-back operators.” She continued: “It’s not right that people can be pushed out of their homes through dodgy deals.”
