* transfer the regulation of new and existing second charge residential mortgages from the Office of Fair Trading (OFT) to the Financial Services Authority (FSA), to ensure consistent standards of consumer protection and simplify the regulatory environment for lenders and borrowers;
* ensure consumer protections are maintained when a mortgage book is sold by a mortgage lender to an unregulated firm; and
* extend the current regulation of the sale and rent back market to all providers, to ensure appropriate protection for consumers.
Mark Hoban, Financial Secretary to the Treasury said:
“The Government believes that this package of measures will enhance protection for consumers in the mortgage market. Giving the FSA responsibility for the whole residential mortgage market will simplify the mortgage regulation landscape for consumers and lenders. This will ensure that existing second charge mortgage borrowers who fall into arrears or face repossession on both first and second charge mortgages benefit from being regulated by a single organisation, maximising consumer protection and ensuring a more coordinated approach between lenders.
“The measures on mortgage books and sale and rent back have been introduced to address a genuine gap in the regulatory architecture, and will ensure consumers will be better protected in the mortgage market.”
CML director general Michael Coogan said:
"With yet more mortgage activities to become regulated, as well as the Mortgage Market Review to finalise, it is more important than ever to focus on the key outcomes that regulation needs to deliver, otherwise implementation could become unmanageable for both firms and the regulator. We are working closely with the FSA to try to construct an effective regulatory system that brings the right results for consumers, firms and the financial system."
The statutory instruments will be published later in 2011. In advance of this, the Government expects the FSA to begin work immediately to implement these measures.
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