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Written by rosalind renshaw

Tighter clampdowns on the frequently murky world of sale and rent-back operators are now in place.

Changes to the Financial Services and Markets Act 2000 came into effect last week, improving the level of protection for consumers who are often persuaded to sell their house at well under market value in return for a tenancy which turns out to be insecure.

The FSA said it welcomes the new legislation, as it believes some small firms and individual investors who provide sale and rent-back agreements think they do not need to be regulated because it is not their main source of business.

The changes make it clear that anybody who conducts sale and rent-back business – even a single transaction – must be authorised by the FSA, unless they are related to the customer.

‘Related’ for the purposes of the Act means a spouse or civil partner, parent, grandparent, child or grandchild, or sibling.

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