OFT to probe 'sale and rent back'

[Legal Beagles]

The Office of Fair Trading will study protection for consumers in the so-called "mortgage rescue" market.

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[Paule]

Re: OFT to probe 'sale and rent back'

From the OFT Site The Office of Fair Trading: OFT launches market study into sale and rent back

OFT launches market study into sale and rent back

62/08 14 May 2008
The OFT has launched a market study into the sale and rent back sector.
Sale and rent back (also known as 'sale and lease back') arrangements involve individual homeowners selling their property at a discount in return for the option to remain in the house as a tenant. These arrangements may be taken up by consumers in financial difficulty facing possible repossession of their homes.
Sale and rent back is a relatively new sector which appears to be growing quickly. If the number of consumers potentially facing repossession increases, it is possible that the take-up of sale and rent back arrangements will also increase. Given the current economic climate, the OFT considers this important market study is timely.
The OFT intends to take a detailed look at the characteristics of the sale and rent back product and, bearing in mind the circumstances in which these products are sold, consider whether existing consumer protection legislation is sufficient and effective.
We aim to complete the work in September this year.
John Fingleton, OFT Chief Executive, said:
'Sale and rent back schemes might be helpful for some consumers but there are a number of potential concerns including whether consumers in difficult circumstances are making well informed choices. We are therefore prioritising this work to take a good look at whether consumers are adequately informed and protected.'
The OFT will be contacting key parties directly. Other interested parties can submit written views to:
Sale and rent back study
Office of Fair Trading
Fleetbank House
2-6 Salisbury Square
London EC4Y 8JX
Email: saleandrentback@oft.gsi.gov.uk
Further information can be found in the market study of this website.
NOTES
1. The OFT will contact trade bodies, providers of sale and rent back arrangements, consumer groups and other organisations associated with the industry. The OFT also aims to contact consumers who have used sale and rent back schemes. The OFT will also contact, and work closely with, other government departments, including the FSA, throughout the study.
2. OFT market studies are carried out under section 5 of the Enterprise Act 2002 (EA02) which allows a market-wide consideration of both competition and consumer issues.
3. The OFT is unable to provide advice or resolve individual complaints for consumers. Consumers who are concerned about whether sale and rent back is the right product for them should seek independent advice. They may wish to contact an organisation such as their local Citizens Advice Bureau. Consumers who are concerned they have been unfairly treated by a company offering sale and rent back can contact Consumer Direct (tel: 0845 04 05 06, or visit the Consumer Direct website).

[Paule]

Re: OFT to probe 'sale and rent back'

Launch of sale and rent back market study

The Office of Fair Trading: Launch of sale and rent back market study

14 May 2008
The OFT has announced the launch of a market study looking at sale and rent back arrangements.
Sale and rent back (also known as sale and lease back) arrangements involve individual homeowners selling their property at a discount in return for the option to remain in the home as a tenant. These arrangements may be taken up by consumers in financial difficulty facing possible repossession of their homes.
Sale and rent back is a relatively new market which appears to be growing quickly. There is little detailed information about the size of the sale and rent back market at present, but going forward if the number of repossessions increases, it is possible that take up of sale and rent back arrangements will also increase. Given the current economic climate, the OFT considers it is timely to launch this important market study now.
The OFT will take a detailed look at the characteristics of the sale and rent back product and the circumstances in which these products are sold. The OFT also intends to collect further evidence on homeowners' experience of sale and rent back arrangements and consider whether it is likely that homeowners entering into such arrangements are making informed choices.
If the OFT concludes that existing consumer protection is not sufficient in this area, it will consider whether further action is appropriate, including recommending that consumer protection should be strengthened in this area.
This market study is designed to be a short study focused tightly on the sale and rent back product. The OFT will publish the report of its findings on completion of the market study. This is currently expected to be in Q3 2008. However, we will monitor the market closely and may accelerate the work if we find indications that these products, and the way they are sold, appear likely to give rise to significant consumer detriment in the short term.
Possible outcomes of a market study include: giving the market a clean bill of health, publishing information to help consumers, encouraging firms to take voluntary action, encouraging a consumer code of practice, making recommendations to the Government or sector regulators, investigation and enforcement action against companies suspected of breaching consumer or competition law, or a market investigation reference to the Competition Commission.
The OFT will be contacting key parties directly. Other interested parties can submit written views, preferably before the 14 June 2008, to:
Sale and rent back study
Office of Fair Trading
Fleetbank House
2-6 Salisbury Square
London EC4Y 8JX
Email: saleandrentback@oft.gsi.gov.uk
The OFT is unable to provide advice or resolve individual complaints for consumers. However, the OFT is keen to receive information concerning complaints about sale and rent back companies and, where we receive sufficient evidence, will consider the appropriate action to take. Consumers who are concerned about whether sale and rent back is the right product for them should seek independent advice from an organisation such as the local Citizens Advice Bureau. Consumers who are concerned that they have been unfairly treated by a company offering sale and rent back can contact Consumer Direct on 08454 04 05 06 (or see the Consumer Direct website).