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Mortgage borrowers to get extra protection

Thursday, 26 November 2009 Writes Hazel Cottrell hazel.cottrell@consumerchoices.co.uk

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The government will provide better protection to mortgage borrowers whose mortgages are sold on, under new proposals.

Borrowers whose mortgages are sold on to third parties will be given greater protection by the Financial Services Authority (FSA), if new proposals are approved.

We are determined to reform this system for the future.

The proposals, published yesterday by the Treasury, also include plans for the FSA to regulate buy-to-let mortgages and second-charge mortgages. The consultation on these proposals is open until 15 February 2010.

Sarah McCarthy-Fry, exchequer secretary, said: “The financial crisis has raised issues around the world about the regulation of the mortgage market.

“We are determined to reform this system for the future, to offer both stronger protection for consumers and greater stability in the housing market.”

Michael Coogan, director of trade body the Council of Mortgage Lenders (www.cml.org.uk) admitted mortgage lenders will have a regulatory shake-up in 2010.

But he added: “It’s important that change should have a clear rationale and a clear set of outcomes, and not be implemented simply for its own sake as a reaction to past events.”

The banking sector may face additional reforms as the Walker Report, published today, suggests banks should be forced to disclose the number of employees earning more that £1million.

The report also proposes changes to bonus schemes and Chancellor Alistair Darling said the proposals are the “blueprint for how banks must be run in the future”.