Mortgage borrowers to receive more protection

Wednesday, 25 November 2009 12:00

Borrowers taking out buy-to-let and second-charge mortgages could soon by covered by FSA regulation if government proposals get the go-ahead.

The plans, outlined today by the Treasury, could also see protection for borrowers when lenders sell on mortgage books to third parties.

Expansion of the FSA's remit has been proposed in a bid to ensure more borrowers are treated fairly by their lenders.

Sarah McCarthy-Fry, exchequer secretary for the Treasury, said: "Our focus has been to do all we can to make sure people can stay in their homes and to limit repossessions as much as possible."

However, the plans have been greeted with a mixed reaction by the Council of Mortgage Lenders (CML) which welcomed most of the proposals, but admitted it was sceptical about the extension of regulation to the buy-to-let market.

The CML said it was not clear on whether the proposals were attempting to limit market risk or protect consumers.

It said there was evidence consumers were disadvantaged by buy-to-let mortgages.

And it also raised concerns the Treasury would not protect amateur property investors from making bad investment decisions by regulating the mortgage process. The CML said the sale process needed to be targeted for this to be properly tackled.

Michael Coogan, CML director general, said: "2010 is clearly going to be a year of regulatory change for mortgage lenders - but it's important that change should have a clear rationale and a clear set of outcomes."

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