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Greater protection afforded to mortgage borrowers

Greater protection afforded to mortgage borrowers

Category: Mortgages

Updated: 27/11/2009
First Published: 25/11/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The protections enjoyed by mortgage borrowers in the UK are to be strengthened by under new proposals, the Treasury has said.

The Government's consultation document has outlined plans for the Financial Services Authority to protect borrowers whose mortgages are sold onto third parties, ensuring fairer treatment.

In addition, the proposals also recommend that the FSA's remit is expanded to include the regulation of buy-to-let and second charge mortgage .

Second charge mortgages usually come in the form of a secured loan.

"With the mortgage industry under closer scrutiny than ever before, these recommendations should come as no great surprise. In an effort to treat customers more fairly it seems the FSA will be provided with more regulatory responsibility," commented Lee Tillcock, editor of Moneyfacts.

"Regulation is coming, make no mistake. What we need now is for the whole of the financial services community, including brokers, to ensure that they shape any legislation to best meet the needs of the whole sector.

"Far better that thought is put into this before inappropriate regulation kills what's left of the buy-to-let and second charge markets."

However, the Finance and Leasing Association (FLA) has warned the Government that the new proposals could lead to confusion.

"The Government's proposals will see the second charge mortgage regulation divided between the Office of Fair Trading and the FSA," commented Fiona Hoyle, head of consumer finance at the FLA.

"The different regulators and two separate regulatory regimes could create confusion for both lenders and consumers. Close co-operation between the FSA and OFT will therefore be essential."

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