FSA shows its teeth with probe of rent-back firm
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The Financial Services Authority is already investigating a sale-and-rent-back firm for bad practices and misconduct, less than a year after regulating the sector.
Replying to a Freedom of Information request from Mortgage Strategy, an FSA spokeswoman says: “I can confirm that the FSA currently has one enforcement investigation into an authorised firm for rent-back bad practices and related misconduct.”
The FSA adopted a two-stage approach to regulating the rent-back market.
It implemented an interim regime from July 1 2009 and full regulation of the sector in June 2010.
The regulator says it cannot confirm how many companies are currently regulated to carry out rent-back activities.
As part of its regulation of the sector it banned exploitative advertising, cold calling and high-pressure sales techniques. It also introduced a 14-day cooling-off period.
Richard Farr, director of Telos Solutions, says that there has been a lot of criticism of the regulator for letting malpractice or potential malpractice go uninvestigated for a long time, so its clampdown should be commended.
He says: “In one respect you could say the industry should be applauding the FSA for setting the bar so high with stringent measures and for enforcing them quickly. At least everybody knows where they stand.
“If there is anybody with bad intentions the FSA is getting them out of the way.”
He adds that the sector was rife with bad practices before the regulator authorised it and it still remains a controversial part of the financial services market.
In February Which? Money revealed that it had reported two rent-back firms to the FSA after un-covering what it called woefully inadequate advice in the sector.
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Readers' comments (3)
Anonymous | 28 Mar 2011 9:19 am
Pity the FSA cannot be (historically) applauded for setting the bar so high on monitoring the Banks rigorously enought to have prevented the 2008 crisis.
I agree this is great but the FSA are incapable to taking on anything or anyone who is 'BIG'.
The FSA are systemically weak because they have no leadership from Turner or Sants
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Anonymous | 28 Mar 2011 9:31 am
If this firm has done something wrong then they should of course be taken to task. However this is just another example of the FSA doing too little too late. The FSA is out of control and acts more like the CIA every day - a law unto itself picking off only the easy targets while it continue to allow the big boys in particular the banks to get away with daylight robbery and murder. It’s an absolute scandal and disgrace that no one seems to be regulating the regulator!
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Bonita | 29 Mar 2011 3:01 pm
The FOS are even worse. Helped with a case recently where the Ombudsman fined Capital Bank £50 for failing to produce documents requested under the Data Protection Act but still did not order the Bank to produce this paperwork! These Ombudsman services are a pile of pants and they do not have to respect laws passed by Pariament. They should all be ultimately accountable to a Government minister but the govt wants them to remain independent. Don't bother with Ombudsman service - go straight to court where you will be treated with respect by a Judge who cannot overlook any contravention of the laws of this land
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