A new report published by the Financial Services Authority has found the majority of sale and rent back transactions were either unsuitable or unaffordable. The FSA has reviewed all regulated SRB firms and now all have more or less stopped taking on new business while one firm has been referred to the FSA's enforcement division.
The FSA reviewed a total of 22 firms, but only nine had been active since they began regulating this sector. Five of the nine firms have stopped doing business in this sector while another three have decided not to do any business for the foreseeable future, while another firm will now only purchase second-hand contracts. The FSA is advising customers who already have SRB deal agreements to seek professional advice or talk to the provider.

The FSA decided to act after being concerned about the way vulnerable customers were targeted, and apparently it also received information that one firm was arranging transactions as buy to let mortgages. In this instance the properties were purchased by the firm for less than market value before the purchase price was inflated to defraud the lender. Additional areas of concern included the fact that customers weren't given adequate time to consider the agreement, and the firms in question didn't fully assess whether such deals were appropriate and affordable for customers, especially as such schemes are often a last resort for homeowners struggling to meet mortgage repayments.

An earlier report by consumer group Which? Last February had already found advice given to customers to be inadequate, and the group has welcomed this report from the FSA, but hopes customers given poor advice will receive sufficient redress.