•Access to redress provision for borrowers under Mortgage Code rules is now secured
•Over three million homebuyers will regain protection
The Treasury has announced that following its public consultation, consumer complaints in relation to firms covered by the MCCB will be transitioned to the Financial Ombudsman Service (FOS).
Until the MCCB pointed out the gap in consumer protection, many borrowers who had taken out mortgages before 31 October 2004 would have lost rights to consumer protection. This would have affected the rights of over three million homebuyers.
At present complaints about products and services provided by firms registered with MCCB are dealt with through independent arrangements set up under the Mortgage Code and MCCB Rules. After statutory regulation comes into effect, complaint
resolution – for matters unresolved by a firm’s own internal complaints process - will be dealt with by the Financial Ombudsman Service under FSA rules. The potential
‘loophole’ as to who would adjudicate on complaints about mortgages taken out under the Mortgage Code which arise after statutory regulation is implemented has now been resolved; the FOS will be empowered to rule on such complaints for firms who
in future become authorised by the FSA to transact mortgage business.
Financial Secretary to the Treasury, Ruth Kelly MP has said: “These arrangements will benefit consumers by providing a seamless transition to regulation - with no gap in consumer protection, and provide certainty for the industry. The arrangements were overwhelmingly supported by respondents to the consultation.”
MCCB is particularly pleased at this decision, as it was responsible for highlighting the potential gap in consumer protection to the Treasury and, during the consultation,
has lobbied hard for a transitioning solution for complaints under the FOS.
MCCB Chief Executive, Luke March said
“Customers of MCCB registered firms which become FSA authorised for mortgages after statutory regulation commences, will now be able to take any future grievances about their mortgages – when purchased under the protection afforded by the Mortgage Code - to the FOS for resolution. The positive response to the consultation from the industry and consumer bodies has facilitated a practical and appropriate solution to this issue by the Treasury. We are pleased that by MCCB highlighting and publicising this issue, a potential gap in consumer protection has now been closed and we are significantly closer to achieving our goal of a seamless transition to statutory regulation.”
