The FSA has proposed a ban on exploitative advertising and high-pressure sales techniques by sale and rent back (SRB) firms.
The move comes as part of attempts to protect vulnerable consumers from the controversial sale and rent back (SRB) market.
Under the proposals, which are open for responses until 30 November and due to come into effect in June next year, the regulator wants to prohibit firms from dropping promotional leaflets through letter boxes and prohibit the use of terms like ‘fast sale', ‘mortgage rescue' and ‘cash quickly' in literature.
Ed Harley, head of mortgage policy at the FSA, says many of the people targeted in SRB are financially vulnerable and have been badly hit by the experience.
He adds: "The FSA's proposed new rules will help to protect consumers. We want to prevent high-pressure and inappropriate sales, and help consumers understand SRB products, so they only enter into SRB where it is an appropriate and sustainable solution for them."
The FSA has already said consumers must be sold suitable products, which take account of their circumstances, needs, and affordability. Consumers must also have time to consider the nature of the product and possible alternatives before reaching a decision.
SRB schemes involve individuals selling their home, usually at a discount, and obtaining an agreement to remain in the property for a set period.
SRB interim regulation started on 1 July 2009. Under the interim regime, SRB firms need to meet FSA threshold conditions including the requirement to be run by fit and proper people. The full regime will begin on 30 June 2010.
All firms seeking to undertake SRB business need to apply for authorisation and about 80 firms have currently done so.
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