Lenders back regulation of second-charge mortgages
Lenders are backing the proposed regulation of the second-charge mortgage market.
Responding to a Treasury consultation, the Council of Mortgage Lenders (CML) has also said it wants to ensure borrowers are sufficiently protected when mortgage books are sold on.
On second-charge lending, the body has restated its longstanding position that all residential mortgage lending should be regulated by the Financial Services Authority (FSA).
In addition, lenders agree that consumers may suffer when mortgage books are “sold on” and want the scope of the FSA extended to address this.
However, regulation should only apply when the new owners take day-to-day decisions on interest rates, charges, service levels, and arrears management, according to the CML.
Turning to buy-to-let lending, the Council’s members are opposed to FSA regulation on the grounds that this area of the UK mortgage market essentially involves commercial transactions with an investment dimension.
Regulation could therefore impinge on an “inappropriate range” of commercial transactions, while not addressing the issue of property investment advice (a key area that can result in problems for borrowers), or systemic risk in the buy-to-let lending sector.