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25 November 2009

Greater protections for mortgage borrowers

The protections enjoyed by UK mortgages borrowers are to be strengthened under new proposals published by the Treasury today.

Under the proposals borrowers whose mortgages are sold onto third parties will be protected by Financial Services Authority 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:

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.

Further details are available in Notes for editors below.

Notes for editors

The Government is taking action to reform banking and financial service regulation. On 8 July, the Government published Reforming financial markets, a paper setting 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 consultation period for these proposals closed on 30 September, and on 19 November the Government published a document setting out its response to the consultation.

On 2 July, the Government published a white paper on consumer rights, A Better Deal for Consumers. This set out proposals to provide further help to people in difficulty with their finances and proposals to strengthen the UK’s consumer credit regime, including measures to:

On 19 October, the FSA published a discussion paper on its approach to mortgage regulation and a package of proposals to improve its existing regime.  This paper is available on the FSA’s website.

The Government remains committed to helping households through the downturn and ensuring that there is an appropriate framework of support for mortgage borrowers. The Government's proposals in the consultation published today build on the comprehensive package of support for homeowners facing financial difficulties: 

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