The protections
enjoyed by UK mortgages borrowers are to be strengthened under new
proposals published by the Treasury today.
Under the proposals borrowers whose mortgages are sold onto third
parties will be protected by Financial Services Authority
regulations requiring fair treatment of customers. In addition,
the Government is proposing the expansion of the FSA’s remit to
include the regulation of buy-to-let and second-charge mortgages.
Exchequer Secretary Sarah McCarthy-Fry said:
"Since the onset of the global financial crisis, the
Government has worked hard to ensure mortgage borrowers are
treated fairly by their banks. 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.
"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 Government is publishing a consultation document, which sets
out its proposals to:
* extend the scope of FSA regulation to include second-charge
mortgages;
* extend the scope of FSA regulation to include
buy-to-let mortgages; and
* protect borrowers when lenders
sell on mortgage books to third parties.
The consultation sets out the details of the proposed legislation
and will close on 15 February 2010 and any final measures will be
implemented through secondary legislation.
The consultation builds on announcements made in Reforming
financial markets, which was published by HM Treasury in July of
this year and set out the Government’s analysis of the causes of
the financial crisis, along with a series of proposals to reform
and strengthen financial regulation, and protect and support
consumers. The Government will implement these proposals via the
Financial Services Bill currently before Parliament.
Further details are available in Notes to Editors below.
Notes for Editors
The Government is taking action to reform banking and financial
service regulation. On 8 July, the Government published Reforming
financial markets, a paper setting out the Government’s analysis
of the causes of the financial crisis, along with a series of
proposals to reform and strengthen financial regulation, and
protect and support consumers. The consultation period for these
proposals closed on 30 September, and on 19 November the
Government published a document setting out its response to the
consultation.
On 2 July, the Government published a white paper on consumer
rights, A Better Deal for Consumers. This set out proposals to
provide further help to people in difficulty with their finances
and proposals to strengthen the UK’s consumer credit regime,
including measures to:
* tackle consumer protection issues in particular parts of the
consumer credit market;
* raise standards in decision-making
across all regulated consumer credit products; and
* make the
regulatory regime for consumer credit effective for all consumers.
On 19 October, the FSA published a discussion paper on its
approach to mortgage regulation and a package of proposals to
improve its existing regime. This paper is available on the FSA’s website.
The Government remains committed to helping households through
the downturn and ensuring that there is an appropriate framework
of support for mortgage borrowers. The Government's
proposals in the consultation published today build on the
comprehensive package of support for homeowners facing financial
difficulties:
* Homeowners receive important protection from FSA regulation of
mortgages, which requires lenders to treat customers fairly and
treat repossession as a last resort. On 19 October, the FSA
published a discussion paper on its approach to mortgage
regulation and a package of proposals to improve its existing
regime. This paper also expresses the FSA’s support for the
proposals set out in the Government's consultation
document. Stakeholders may wish to view the FSA's paper,
which is available on the FSA’s website.
* The framework of mortgage regulation is supported by the
mortgage pre-action protocol introduced in November 2008, which
sets out the actions courts expect lenders to take before bringing
a possession claim to court. The protocol applies to first- and
second-charge residential mortgages. Over 116,000 households are
benefiting from lender forbearance on their mortgages.
* The Government is committed to ensuring that high quality debt
advice is available for borrowers who need it. Since April 2006,
the Government has invested over £130m in a face-to-face money
advice project aimed at the most vulnerable households. At the
2009 Pre-Budget Report, the Government increased spending on debt
advice, including a further £5.85 million for National Debtline
between November 2008 and March 2011, to increase provision of
free telephone debt advice.
* Universal protection for borrowers from FSA regulation and the
courts is supported by a number of Government schemes providing
targeted help to specific groups of homeowners. For those who need
direct assistance, the Government is helping through Support for
Mortgage Interest. For those who have exhausted all other options,
the Government has introduced the Mortgage Rescue Scheme and
Homeowners Mortgage Support. Over 300,000 households have received
help and advice in connection with their mortgage payments since
April 2008.
* On 8 September the Government launched a new national campaign
to help struggling homeowners take control of their finances and
make the most of the support available for them to avoid
repossessions and stay in their homes. Concerned homeowners will
be able to go to www.direct.gov.uk/mortgagehelp,
or contact the National Debtline on 0808 808 4000 for impartial
advice, real life examples of people who have already benefited
from support, and to develop a personal action plan tailored to
their particular circumstances.
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