Which? Money has reported two sale-and-rent-back firms to the Financial Services Authority after uncovering what it called woefully inadequate advice in the sector.
An investigation by the consumer watchdog that consulted 17 advisers from nine companies found just two offering acceptable advice.
Causes for concern raised by Which? include an adviser who gave a quote that would not have left the customer enough money to pay off their debts and one who did not ask the size of the customer’s debts.
Which? chief executive Peter Vicary-Smith says the FSA has to do more to ensure rules are followed.
But Pete Thomson, managing director of Residential Property Solutions, says: “The FSA has only recently started to regulate the rent-back market. It is doing a good job but it is going to take some time to wheedle out firms that are not adhering to the rules.
“I’m sure that regulating the perimeter is high on its agenda.”
He adds: “Which? has high- lighted that some firms are acting illegally and that does not surprise me too much. We knew that already and have worked with the FSA to identify them.” Bill Warren, managing director of Bill Warren Compliance LLP, has several rent-back customers and says that while most com-panies in the industry are
aware of the FSA’s regu-lations, it is not surprising to see the findings of the investigation.
He adds: “Companies offering poor quality of advice to clients is a serious issue.
“I expect the regulator to take a hard line with the firms that are reported to it as it has been fairly strict since it began fully regulating this market.”