Halifax has called on the government to introduce a regulation framework for the sale and rent back sector.
The high street bank is demanding improved transparency for customers, a method of recourse for those mis-sold policies and the introduction of a compensation scheme.
Joe Higgins, head of mortgages for Halifax said: “If homeowners are in trouble, they need the highest levels of support in the form of transparency and an appropriate level of protection.”
He added that the Halifax claimed the sector should not go unregulated for any longer than is absolutely necessary.
A study by the Office of Fair Trading showed there are more than 1,000 firms offering borrowers struggling with their mortgage repayments sale and rent back services.
Meanwhile, in a letter to Gareth Thomas, minister for trade, investment and consumer affairs, Scottish deputy first minister Nicola Sturgeon called on the government to put a stop to the mis-selling of rent back schemes, the Herald reports.