CML and Citizens Advice respond to OFT sale and rent back recommendations

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Wednesday, 15, Oct 2008 12:00

The Council of Mortgage Lenders and Citizens Advice support the Office of Fair Trading’s new recommendation today that sale and rent back transactions should be regulated by the Financial Services Authority. The conclusion is the outcome of an OFT market study prompted by the concerns of the CML, Citizens Advice and Shelter, among others [see last October’s joint press release outlining the concerns].

The OFT’s recommendation is very clear, but the Government will now need to decide whether to accept the recommendation and bring forward specific regulatory proposals. The OFT believes this could be achieved relatively quickly and the CML and Citizens Advice would like to see prompt implementation. While further consultation on specific proposals would be necessary, both organisations strongly support the general direction outlined by the OFT.

CML Director General, Michael Coogan, commented:

“It is a year ago that the CML, Shelter and Citizens’ Advice first jointly called for the regulation of the sale and rent back sector. The OFT recommendation potentially brings regulation a step closer. In the meantime, there has been some progress towards improved transparency for consumers through voluntary measures, but a level playing field requires a regulatory approach to ensure appropriate protection from unscrupulous operators for consumers who may be in a vulnerable situation.”

Citizens Advice Chief Executive, David Harker, commented:

“Citizens Advice warmly welcomes the findings of the OFT's market study. We have seen cases of very severe problems arising from bad practices connected to sale and rent back agreements. These are long term agreements about people's homes so when sale and rent back goes wrong people can suffer huge financial and emotional loss. While sale and rent back agreements might be the right thing for some people, consumers need the sort of robust and binding safeguards that only statutory regulation is likely to provide.

“With more people seeking advice about mortgage arrears we are concerned that these safeguards should be put in place as soon as possible. Therefore we urge the government to act on the OFT recommendations without delay. In the meantime we call on the reputable businesses in the sale and rent back sector to develop rigorous standards of conduct in the way that sale and rent back agreements are sold and managed.”

NOTES TO EDITORS

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 98% of all residential mortgage lending in the UK. There are 11.74 million mortgages in the UK, with loans worth over £1.2 trillion.

2. The Citizens Advice service is a network of independent charities that helps people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more information in England and Wales see www.citizensadvice.org.uk

CONTACT

CML PRESS OFFICE

Sue Anderson – 020 7438 8924

Bernard Clarke – 020 7438 8923

Sarah Robson – 020 7438 8922

CITIZENS ADVICE PRESS OFFICE

Moira Haynes – 020 7833 7107 or 07790 019116