CML knocks Treasury's support for FSA regulation of buy-to-let
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The Treasury’s backing for buy-to-let to be regulated by the Financial Services Authority has received a lukewarm reception from the Council of Mortgage Lenders.
Last week the government re-vealed that it supports plans for the expansion of the regulator’s remit to include buy-to-let and second charge mortgages.
But the CML has hit out at the move, saying it is unclear whether the Treasury’s reason for supporting the extension to the FSA’s scope relates to market risk or consumer protection.
It argues that if the objective is to protect amateur property investors from making poor decisions, regulating the mortgage process as opposed to the sales process will not necessarily be the answer.
The trade body says it has seen little evidence of detriment to buy-to-let mortgage borrowers arising from their borrowing.
Michael Coogan, director-general of the CML, says: “We will study the Treasury’s consultation paper in detail, in parallel with participating in the FSA’s consultation process on potential changes arising from its Mortgage Market Review.”
But the CML, along with the Association of Finance Brokers, has welcomed the FSA’s move to regulate second charge lending.
Robert Sinclair, director of the AFB, says: “In our view this will benefit brokers, lenders and consumers. Of course, we will have to examine the proposals in detail and consult our members before formally responding.
“The Treasury appears to have rejected the simpler approach of transferring the existing regime to FSA control.”
The government has also re-vealed that it plans to provide additional protection for borrowers whose mortgages have been sold on to third parties.
These consumers are to receive protection under FSA regulations relating to the fair treatment of customers.
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