Press
House prices rise along with confidence
by Joy Dunbar
FinancialAdviser 3rd December 2009
Third party and buy-to-let mortgages will be protected by FSA regulations under proposals published by the government last week.
The consultation sets out the details of the proposed legislation and will close on 15 February next year.
Sarah McCarthy-Fry, Exchequer secretary, said that since the onset of the global financial crisis the government has worked hard to ensure mortgage borrowers are treated fairly by their banks.
She said: "But we are aware that this crisis has raised issues around the world about the regulation of the mortgage market. We are determined to reform the system for the future, to offer both stronger protection for consumers and greater stability in the housing market."
The FSA published a discussion paper on its approach to mortgage regulation and a package of proposals to improve its existing regime in October.
Michael Coogan, director general of the Council of Mortgage Lenders, said it is studying the Treasury consultation paper in detail, in parallel with the FSA's consultation on potential changes arising from the mortgage market review.
He said: "Clearly, 2010 is going to be a year of regulatory change for mortgage lenders - but it is important that change should have a clear rationale and a clear set of outcomes, and not be implemented simply for its own sake as a reaction to past events that conduct of business regulation would not have prevented."
Paul Broadhead, head of mortgage policy for the Building Societies Association, said: "We support the regulation of second charge lending by the FSA to ensure that all customers are treated consistently. The challenge for the FSA and the Office of Fair Trading will be to ensure a smooth transition period for both customers and lenders."
James Carter, principle of London-based adviser Independent James, said he thought it was a good idea his clients found it confusing when they borrowed with one lender and then it was sold off to another.
He said: "It does not always make sense to the borrower. Some borrowers thought it was unusual that they borrowed with one lender and a month later they get a letter through and their mortgage is not with the original lender it is now with a different a lender.
"Anything that gives a borrower some sort of continuity will make it worthwhile and there needs to be more transparency."
Mr Carter said FSA regulation of buy-to-let and second-charge mortgages was inevitable, but it is case of shutting the case after the gate after the horse has bolted.