Warning notice statement 14/11

The Financial Conduct Authority (the FCA) gave a Sale and Rent Back (“SRB”) firm a
warning notice on 30 April 2014 proposing to take action in respect of the conduct
summarised in this statement.

IMPORTANT: a warning notice is not the final decision of the FCA. The
SRB firm has the right to make representations to the Regulatory
Decisions Committee (RDC) which, in the light of those representations,
will decide on the appropriate action and whether to issue a decision
notice. The RDC is a Committee of the FCA board which decides whether
the FCA should give certain statutory notices described as within its
scope by the FCA’s Handbook.

If a decision notice is issued, the SRB firm has the right to refer the
matter to the Upper Tribunal which would reach an independent decision
on the appropriate action for the FCA to take, if any.

If either the RDC or the Upper Tribunal decides that no further action
should be taken, the FCA will publish a notice of discontinuance provided
it has the SRB firm’s consent.

The following is a summary of the reasons why the FCA gave the SRB firm a
warning notice:

•
One of the FCA’s operational objectives is securing an appropriate degree
of protection for consumers.

•
The FCA considers that during the period from 14 July 2010 to 17 May
2011 (the Relevant Period) the SRB firm breached Principle 6 (Customers’
Interests) of the FCA’s Principles for Businesses by failing to pay due
regard to the interests of its customers and treat them fairly in respect of
the affordability and appropriateness of SRB transactions entered into by
its customers.

•
In particular, the FCA considers that, during the Relevant Period, the SRB
firm failed to:

o
ensure appropriate customer information was gathered prior to permitting
its customers to enter into an SRB transaction;
o
assess reasonably the appropriateness of some of the SRB transactions it
permitted its customers to enter into. Specifically, it failed to consider and
adequately explore other options that may have been more appropriate to
the customers' needs and circumstances;
o
assess reasonably the affordability of some of the SRB transactions it
permitted its customers to enter into, in accordance with the requirements
of the FCA’s Mortgages and Home Finance: Conduct of Business
sourcebook;
o
ensure that valuations of the properties were carried out independently by
a surveyor who owed a duty of care to the customer; and

o
ensure that its record keeping was adequate to demonstrate compliance
with regulatory requirements.

•
The FCA considers that, as a result of the above failings the SRB firm’s
customers were not treated fairly and may have entered into transactions
that were unaffordable and/or inappropriate.