Under the proposals borrowers whose mortgages are sold onto third parties will be protected by Financial Services Authority (FSA) 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.
