In the relevant period, Quick Purchase entered into 14 regulated sale and rent back transactions with customers of which 11 were either inappropriate, unaffordable or both. Quick Purchase must also pay more than £200,000 in redress to the affected consumers.
Director Steven James Martin has been censured for failing to exercise due skill, care and diligence in managing the firm.
The FCA said the sales were particularly serious because they led to "significant consumer detriment" causing customers potentially to forgo between 29-38% of the equity in their homes.
The regulator said that Quick Purchase specifically failed to consider and adequately explore other options that may have been more appropriate to the customers' needs and circumstances, and did not ensure that valuations of all properties were carried out independently by a surveyor who owed a duty of care to the customer.
In addition, its record keeping was not adequate enough to demonstrate compliance with regulatory requirements.
Quick Purchase describes itself as a specialist SRB buying company, enabling homeowners to stay in their house and rent it back. It became authorised on 14 July 2010 to carry out sale and rent back activities.
The Authority has recognised that Quick Purchase agreed to vary its Part IV (now Part 4A) permission at an early stage and no longer enters into any new SRB contracts or agreements.
In March 2011 the Authority undertook a thematic review of the SRB market. The review identified widespread poor practice among SRB firms. The main conclusion was that the majority of the SRB sales, from these SRB firms, were either unaffordable or inappropriate, meaning that consumers had a detrimental outcome or were likely to in the future. Common failings from this review included those relating to correctly assessing appropriateness and affordability, disclosure, record keeping and sales processes.
Quick Purchase's procedures in gathering information on the customers' personal and financial circumstances increased the risk that the customers entered into the transactions without their personal circumstances being assessed adequately for the purpose of ensuring that the transactions were both affordable and appropriate.
Mark Steward, director of enforcement and market oversight at the Financial Conduct Authority, said:
“This case highlights the importance of protecting consumers even when regulated financial services is only part of your business. The regulations which govern sale and rent-back are designed to protect customers in financial difficulty and to guard them from unsuitable deals. The extensive redress package which we have asked Quick Purchase to implement will address the detriment Quick Purchase’s customers have suffered.”
