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Sale-and-rent back advice slammed

Sale-and-rent back advice slammed

Category: Mortgages

Updated: 22/02/2011
First Published: 22/02/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

An investigation into the state of the sale-and-rent-back market has uncovered advice that has been dubbed 'woefully inadequate'.

Sale-and-rent back is usually a last resort for homeowners as they usually only receive 60-70% of their home's value and may eventually be forced to move from their home.

The Financial Services Authority (FSA) introduced greater protection for consumers in this area last year.

An investigation by Which? has found large-scale failings by firms in the sale-and-rent back arena, however, leading to two firms being reported to the regulator.

Of the 17 advisers contacted across nine sale-and-rent-back firms, just two offered acceptable advice.

Seven advisers failed to discuss whether sale-and-rent-back was the right option for the customer, with six of them going on to give a quote.

One adviser actually gave a quote that would not have left the customer with enough money to pay off their debts – the very reason given for considering a sale-and-rent-back option.

Another adviser did not even establish how much debt the customer had.

"It's simply unacceptable that people are receiving shoddy advice about such a huge financial decision," said Peter Vicary-Smith, chief executive of Which?.

"Not only are regulated firms not doing enough to ensure vulnerable consumers make the right choices, some are offering sale-and-rent-back that aren't authorised to do so.

"The FSA must tighten the screw on these firms to make sure the rules are followed and consumers are protected."

Property Locksmith and Rapid Property Group have both been reported to the FSA.

Property Locksmith is an introducer, and thus not authorised, but in one case gave a quote for sale-and-rent-back

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