HM TREASURY News
Release (PN 108/08) issued by COI News Distribution Service. 22
October 2008
Today the
Government announced new rules to help protect homeowners, who may
be facing the threat of repossession. New court protocols will
help make repossessions a last resort, and the Government is
proposing that companies engaged in sale and rent back schemes,
which may target vulnerable home owners, should be brought under
FSA regulation.
The Master of the Rolls has today approved the Civil Justice
Council's new protocol for the courts in mortgage
repossession cases. This sets out clear guidance on the steps that
lenders are expected to take before bringing a claim in the courts
to ensure that repossessions are a last resort.
Lenders will now be expected to demonstrate that they have tried
to discuss and agree alternatives to repossession when borrowers
get into trouble with their mortgage repayments. If a case reaches
court, lenders will be required to tell the court precisely what
they have done to comply with the protocol.
The Government will also be publishing a consultation paper on
bringing sale and rentback under FSA regulation, responding to
recommendations from the Office of Fair Trading's (OFT) study
into the Sale and Rent Back market which was published last week.
Chief Secretary to the Treasury, Yvette Cooper said:
"We need to make sure we help those who might be hardest hit
in the tougher times ahead, ensuring repossession is the last
resort not the first. We also want to make sure that vulnerable
homeowners are protected from exploitation and dodgy deals."
Justice Minister, Bridget Prentice said:
"The new Civil Justice Council protocol forms part of a
wider package of measures which demonstrate this Government's
commitment to provide the best possible support to debtors and
vulnerable borrowers. The protocol sets out all the steps that a
lender should take before issuing mortgage possession proceedings.
Lenders will be expected to consider ways of resolving problems
outside the court system so that mortgage possession claims are
only brought to court after all other suitable options have been exhausted."
Housing minister, Margaret Beckett said:
"We must ensure that every avenue has been explored before
lenders seek to repossess homes. These new measures will further
protect the most vulnerable households in the current economic
climate. We have expanded free legal representation in county
courts for households at risk of repossession, we have provided
more free debt advice and will continue to work closely with
lenders through this difficult time. It is important that
households who have concerns over their mortgage seek advice at
the earliest opportunity, starting by speaking to their lender."
Consumer Minister Gareth Thomas said:
"We need to ensure that these vulnerable consumers are
protected from exploitation and know their rights.
"That's why we've responded so quickly to the OFT
report and committed to working with mortgage industry
representatives and consumer groups, through HM Treasury's
consultation, to determine the best way of regulating this
emerging market."
The OFT market study on the sale and rent back sector, was
published on 15 October 2008, and looked at the impacts, from the
growing sale and rent back market. The OFT report identified that
there is potential for severe detriment to homeowners entering
into these arrangements and made three recommendations to
Government, including compulsory regulation, increasing consumer
awareness and improving information about housing benefits This is
part of a range of initiatives to raise consumer awareness about
the risks around sale and rent back, and to help reduce
repossessions. Actions have been, or will be, taken to raise
consumer awareness and provide help, for example:
* guidance to local authorities on eligibility for Housing
Benefit to avoid uncertainty surrounding eligibility of sale and
rent back tenants for Housing Benefit.
* expanded free legal representation in county courts for
households at risk of repossession.
* providing more free debt advice.
* joint guidance with National Homeless Advice Service for
households facing financial difficulties - 'Worried about
your Mortgage? Get advice now' is available from local
authorities, courts and CAB offices. Notes for Editors
1. The measures announced today build on the Government's
comprehensive housing package announced in September, which
included support for 6,000 of the most vulnerable homeowners
facing repossession through a Government mortgage rescue scheme,
and also further investment in reforms of support for mortgage
interest (SMI), which could help prevent a further 10,000
repossessions. Further details of these measures are available on
* the HM Treasury website: http://www.hmtreasury.gov.uk/newsroom_and_speeches/press/2008/press_88_08.cfm
* the Department for Communities and Local Government website: http://www.communities.gov.uk/news/corporate/950558;
* and the Department for Work and Pensions website: http://www.dwp.gov.uk/aboutus/news/
- smi
2. The Government asked the OFT to look at the sale and rent back
market earlier this year, working to an accelerated timetable, and
to consider options to strengthen consumer protections. The OFT
reported on 15 October, and on the basis of its findings, has
recommended action in several areas. The formal Government
response to the OFT study can be found at http://www.berr.gov.uk/files/file48478.pdf
3. The OFT published its report on the sale and rent back market
study on 15 October 2008: http://www.oft.gov.uk/shared_oft/reports/consumer_protection/oft1018.pdf
4. The Civil Justice Council is an Advisory Public Body,
established under the Civil Procedure Act 1997 with responsibility
for overseeing and co-ordinating the modernisation of the civil
justice system. The CJC provides advice to the Secretary of State
for Justice on the effectiveness of aspects of the civil justice
system, and make recommendations to test, review or conduct
research into specific areas. More information on the CJC,
including its composition, can be found at: http://www.civiljusticecouncil.gov.uk.
Non-media enquiries should be addressed to the Treasury
Correspondence and Enquiry Unit on 020 7270 4558 or by e-mail to public.enquiries@hm-treasury.gov.uk
This Press Release and other Treasury publications are available
on the HM Treasury website hm-treasury.gov.uk For the latest
information from HM Treasury you can subscribe to our RSS feeds or
email service.