Greater mortgage protection proposed

Thursday, November 26th 2009

The Treasury has put forward a number of new proposals to increase protection for consumers in the mortgage market.

Under the planned regulations, the Financial Services Authority's (FSA's) fair customer treatment rules will protect borrowers whose mortgages are sold on to third parties.

The plans also include the potential extension of FSA regulation to include buy-to-let and second-charge mortgages.

A consultation will run on the proposals until February 15th 2010.

Sarah McCarthy-Fry, exchequer secretary, said that the recession had raised questions about how the mortgage sector is regulated.

"We are determined to reform the system for the future, to offer both stronger protection for consumers and greater stability in the housing market," she remarked.

The proposals were welcomed by the Building Societies Association, which said that the issue of mortgages sold on to third parties needs "robust" action to ensure consumers continue to be fairly treated by financial services providers.