MCOB 5.9 Regulated sale and rent back agreements

1. (1)

   1A SRB agreement provider must not enter into a regulated sale and rent back agreement with a SRB agreement seller unless the following disclosures and warnings have been made to the SRB agreement seller, both orally and confirmed in writing:

   1. (a)

      the market value of the property that is the subject matter of the regulated sale and rent back agreement, as determined by any independent valuation under MCOB 2.6A.12 R;

   2. (b)

      if the valuer that has produced the independent valuation in (a) was not acting for the SRB agreement seller in doing so, a prominent warning that this is the case and as such that it is advisable for the SRB agreement seller specifically to consider whether he is content with the market valuation in (a);

   3. (c)

      any fees, charges or retentions that the firm will deduct from the purchase price for the property and any fees or charges otherwise payable;

   4. (d)

      the purchase price that the firm will pay the SRB agreement seller for the property, net of any fees, charges or retentions;

   5. (e)

      the percentage of the figure in (a) for the market value of the property that the figure in (d) for the purchase price represents;

   6. (f)

      brief details of the type and period of the tenancy under the regulated sale and rent back agreement;

   7. (g)

      the minimum period that the SRB agreement seller and his family have a contractual right to remain in the property under the terms of the proposed agreement;

   8. (h)

      if the terms of the tenancy provide for a period of occupancy that is shorter than the minimum contractual period under (g), details of how the firm intends to meet the contractual period under (g);

   9. (i)

      a prominent warning that once the minimum contractual period under (g) expires, the SRB agreement seller and his family may be required to leave the property;

   10. (j)

       the initial rent due under the proposed agreement;

   11. (k)

       the circumstances in which the rent in (j) can be increased or changed in any way; and

   12. (l)

       the risks associated with the transaction from the SRB agreement seller's perspective, including in particular:

       1. (i)

          that failure to abide by the terms of the tenancy may result in the loss of the right to occupy the property; and

       2. (ii)

          that failure to obtain legal or professional advice may mean his interests are not fully protected.

2. (2)

   The firm must make the written disclosures and warnings specified in (1) to the SRB agreement seller in a clear, fair and not misleading way before he enters into the proposed regulated sale and rent back agreement and in doing so must ensure that:

   1. (a)

      the information is set out in the same order as set out in (1);

   2. (b)

      the disclosures and warnings are made in a separate and standalone document; and

   3. (c)

      the disclosures and warnings are accompanied by a prominent written statement from the firm drawing the SRB agreement seller's attention to the importance of the information.

A SRB agreement provider must keep a record of the disclosures and warnings made to the SRB agreement seller under MCOB 5.9.1 R for a period of:

1. (1)

   12 months after the end of the minimum period that the SRB agreement seller and his family have a contractual right to remain in the property; or

2. (2)

   five years from the date of the disclosures and warnings;

whichever is the longer.

1. (1)

   A firm must ensure that, on first making contact with a prospective SRB agreement seller, whether or not he is the firm's customer, who is proposing to enter into a regulated sale and rent back agreement with an unauthorised SRB agreement provider, it provides him with the written warning in (2) before he enters into any such agreement.

2. (2)

   The warning in (1) is that:

   1. (a)

      the agreement provider is not authorised or regulated by the FSA, and that key protections under the regulatory system will not apply; and

   2. (b)

      the provider is not subject to the jurisdiction of the Financial Ombudsman Service, and that the SRB agreement seller will not be entitled to refer complaints against the provider to the Financial Ombudsman Service.

1. (1)

   A firm must ensure that, on first making contact with a customer who is both an individual and an unauthorised SRB agreement provider, when it anticipates giving personalised information or advice on a regulated sale and rent back agreement, it must provide him with the written warning in (2).

2. (2)

   The warning in (1) is that a regulated sale and rent back agreement is a complex legal arrangement and that expert independent legal advice should be obtained before entering into any such agreement.