Financial Services and Markets Act 2000 (Carrying on Regulated Activities by Way of Business) (Amendment) Order 2011

My Lords, I thank my noble friend Lord Newby and the noble Lord, Lord Davies, for their helpful and constructive comments and questions. Let me see if I can address them. First, my noble friend asked about the difference in law between a sale and rent-back agreement and a sale and lease-back agreement. Essentially, there is no difference between the two terms, but this order relates to where firms provide sale and rent-back arrangements to individual consumers. Commercial property is thereby not covered; that is the essential distinction. My noble friend asked about the sunset clause and whether there will be a new order after 2012. It will be for the Treasury to decide whether to renew the order with a further order—with or without a sunset provision—depending on the outcome of the review. The noble Lord, Lord Davies of Oldham, asked whether consumers who are already involved in an arrangement will gain protection through this order. This order clarifies that all providers entering into sale and rent-back arrangements need to be FSA-authorised. It is a matter for the FSA whether to take enforcement action against those firms who have already entered into existing arrangements outside regulation, and decide whether these have taken place by way of business. That is the key and the defining factor. Where an unregulated sale and rent-back transaction, which should have been FSA-regulated, has taken place, those consumers will still have recourse to the Financial Ombudsman Service. The noble Lord asked why there had been no further consultation. This order merely clarifies the intention of the original order, which was subject to full consultation by the Treasury and the FSA. Perhaps I could also concur with the noble Lord in being concerned about people facing repossession. The Government are deeply conscious of the effect that this has on people and, as I think he intimated, the purpose of this order is absolutely to prevent exacerbation of the problem. I pay tribute to the work of the previous Government in setting us on this course in the first place. This order amends the Financial Services and Markets Act 2000 (Carrying on Regulated Activities by Way of Business) Order 2001 to make clear that any provider of a sale and rent-back agreement, unless closely related to the consumer, will be regarded as doing so by way of business and will therefore need to be FSA-regulated. The order improves outcomes for consumers entering into sale and rent-back arrangement first, by increasing the transparency of information provided by sale and rent-back providers; secondly, by reducing the potential for consumers to enter into unsuitable arrangements; and thirdly, by increasing product quality by driving providers to improve, or exit, the market. It has been universally welcomed by consumer groups. Citizens Advice welcomed the government commitment to ensure that people with sale and rent-back agreements are protected against bad practices. The order will ensure that FSA regulation of sale and rent-back agreements operates as first intended. I commend this order to the Committee. Motion agreed.