Giving the FSA responsibility for the whole residential mortgage market will simplify the mortgage regulation landscape for consumers and lenders, said the government.
The Financial Secretary to the Treasury, Mark Hoban announced the plans today to transfer the regulation of new and existing second charge residential mortgages from the Office of Fair Trading (OFT) to the Financial Services Authority (FSA) in a bid for consistency and a simpler regulatory environment.
Portfolios of mortgage loans will also be regulated by the FSA, to maintain the service standards for consumers if their loan is sold on to another lender or unregulated firm.
The FSA also plans to extend the current regulation of the sale and rent back (SARB) market to all providers, which it said will ensure appropriate protection for consumers.
Treasury Minister Hoban, said: “The Government believes that this package of measures will enhance protection for consumers in the mortgage market. 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.”
He said this step was taken on mortgage books and sale and rent back to address a genuine gap in the regulatory architecture and make sure consumers are better protected in the mortgage market.
The Council of Mortgage Lenders (CML) said this extra layer of regulation further adds to the already onerous burden for the regulator and its raft of new requirements already in train.
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.”
The statutory instruments will be published later in 2011 but the FSA will begin implementing the plans immediately.
