The FSA’s full regulatory regime for the SRB market, which will be implemented on 30 June 2010, has also prohibited the use of cold calling and the dropping of promotional leaflets through letter
boxes has been outlawed.
Emotive terms like ‘fast sale’, ‘mortgage rescue’ and ‘cash quickly’ will be banned from promotional literature and in a bid to enhance customer protection, all risks must be clearly signposted during the sales process.
A 14-day cooling-off period to give consumers more time to make decisions has also been introduced. Consumers will also have a security of tenure for a minimum of five years.
Ed Harley, head of mortgage policy at the FSA, said: “We are aware of some firms exploiting vulnerable consumers at a difficult time. So, it is right that we introduce these further protections, and we will take swift action where they are not met.”
Adam Phillips, chairman of the Financial Services Consumer Panel, agreed that regulation would provide better protection for consumers although he warned that firms could still try to exploit them.
He added: “SRB can provide rich pickings for firms seeking to make money from people who are desperate. People see the promise of being able to stay in their own home and get cash upfront quickly, without necessarily being warned of the longer-term consequences.”
Daniel Lowerson, partner at SRB firm DFB Housing Solutions, said the rules would show that SRB was a genuine solution for homeowners.
He added: “I am glad that cold calling and high pressure sales have been banned because now every firm will be on the same playing field and it removes the possibility that consumers will be pressured into decisions.”
