The Financial Services Authority has extended its regulation of sale and rent back by bringing all transactions under its control from today unless it is to family members or a partner.
The changes make it clear that anybody who conducts sale and rent back business – even a single transaction – must be authorised by the FSA, unless they are related to the customer.
The new legislation therefore brings more consumers under the FSA’s regulatory protection.
A related person refers only to that person’s spouse or civil partner, a person whose relationship has the characteristics of a husband and wife relationship or that person’s parent or grandparent, child or grandchild or sibling.
The rule changes are the result of changes to the Financial Services and Markets Act 2000 and the FSA says it aims to improve the level of protection for consumers engaging in sale and rent back transactions.
The FSA welcomes the new legislation as it believes some small firms and individual investors who provide sale and rent back agreements think they do not need to be regulated because sale and rent back is not their main source of business.