A voluntary code for sale and rent back providers may not be sufficient to protect consumers, warns Key Retirement Solutions (KRS).
Last week, the newly formed National Association of Sale and Rent Back (NASARB) announced it would be drawing up a voluntary code of practice for its members to ensure consumers were treated fairly.
However, Dean Mirfin, business development director at KRS, says consumers should not be confident about the products until the code has been finalised.
KRS welcomes the fact the industry has realised there is a major problem with consumers being ripped off, but says sale and rent back schemes continue to be aimed at the most vulnerable people in society, such as the elderly and those in serious debt.
KRS says it continues to be concerned about the sale and rent back industry for a number of reasons. These include: the lack of regulation by the FSA; promotion on the basis of quick sales despite the enormity of the decisions involved; and the fact that many schemes are marketed as equity release, despite their major differences from lifetime mortgage and home reversion plans.
Mirfin says: “The consultation over a planned code is certainly a positive step forward for the industry, but for the time being it still remains an unregulated sector.
“We are pleased by this first step by NASARB, but do not think that this will be enough until the Government and the Financial Services Authority (FSA) investigate this market fully as a matter of urgency and consider regulation before it becomes a future financial scandal.”
He says until the code of practice has been confirmed by NASARB, consumers should continue to seek independent financial advice on unlocking equity from their home and should also seek out alternative measures.
NASARB is due to release a draft version of its code of practice in April.
If you would like to comment on this story, contact:
Tel: 020 7484 9805
e-mail: [email protected]
Regular reminders and updates
9 December 2019 deadline
Joe McDonnell joins as head of portfolio solutions (EMEA)
Adviser of the Year - South East
Fidelity Multi Asset CIO's outlook