BUDGET 2010: Government confirms FSA regulation of secured loans
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The government has confirmed in today’s Budget that it will move secured loans under the Financial Service Authority’s remit.
The government has not given a time-frame as to when it will implement FSA regulation, but this is the first time it has been confirmed by the government.
Proposals in the Mortgage Market Review recommended that secured lending fall under the FSA’s remit.
And today’s Budget report says: “This will create a single regulator for residential mortgage lending, ensuring consistent standards of consumer protection across all mortgages and simplifying the regulatory environment for lenders.”
It did not confirm that it would be moving buy-to-let mortgages under the FSA’s scope and says it is continuing to “explore how best to protect consumers in the buy-to-let market and those whose mortgages are sold on to unregulated firms.”
Robert Sinclair, director of the Association of Finance Brokers, says: “ We welcome the news and campaigned for second mortgages to be regulated by the FSA along with first mortgages.”
But he says it is unlikely the regulation will be implemented until at least 2012.
He says: “The FSA will need to fit this around the MMR and what is happening in Europe.”
Fiona Hoyle, head of consumer finance at the Finance & Leasing Association, says: “Second-charge lenders are not opposed to a move to FSA regulation, but customers are already well protected by the recently-strengthened OFT regime.
“Moving all existing business to a new regulator will create inevitable costs and disruption. The potential for customer confusion must be avoided.”
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Readers' comments (11)
Cavey | 24 Mar 2010 3:50 pm
Does this mean that dual regulation will cease? i.e. will the OFT cease to regulate loan brokers and leave it to the FSA? Where will this leave Consumer Credit licencing?
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Steve Wentworth | 24 Mar 2010 3:58 pm
What about bridging finance?
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Anon | 24 Mar 2010 4:25 pm
They cant even regulate Resi mortgages. Jokers...
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Janet | 24 Mar 2010 4:25 pm
By definition, secured loans are any loans secured against property (Title). This will include bridging loans depending on purchase type, although FSA regulate 1st charge mortgage market and not second charge and commercial (in which Buy to let falls).
Its abit confusing as they state secured loans but failed to state class of charge.
Loans that fall under FSA will no longer require OFT regulations. There is a limit (or used to be £25k) but's all a mess.
Regulatiosn are good so long as they make sense. I think its been over done and now in real danger of completly confusing the public as now im finding even professionals are getting things mixed.
where does the book stop, i dont know, but i see are more & more business elite leaving UK
I hope the government takes a note of this as we're becoming fast a coucil estate of benefit eaters. Trading business now really feels like a thing of the past.
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mic2002 | 24 Mar 2010 4:46 pm
A wee bit late dont you think? Nobody wants to do secured lending anymore!!!
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William Kingsley | 24 Mar 2010 4:47 pm
So glad they are being regulated so it will stop some ambitious young person in a bank selling someone a 2nd charge loan just because they can and because they hit their weekly target in 1 sale and they have no idea of the potential implications to the client and they were probably better doing it some other way
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Compliance Man | 24 Mar 2010 6:01 pm
The move to cover secured loans under FSA is to be welcomed as it is a lot easier and simler for lenders than dealing with the CCA.
There are still lenders doing secured loans although nowhere near as many.
Also, the OFT will continue to regulate those who sell CCA loans which will include unsecured loans and secured loans that do not fall under the FSA's remit - eg commercial property
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Sid Siddiqui | 25 Mar 2010 8:06 am
Long overdue.
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Compliance Man | 25 Mar 2010 9:23 am
The move to cover secured loans under FSA is to be welcomed as it is a lot easier and simler for lenders than dealing with the CCA.
There are still lenders doing secured loans although nowhere near as many.
Also, the OFT will continue to regulate those who sell CCA loans which will include unsecured loans and secured loans that do not fall under the FSA's remit - eg commercial property
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Anonymous | 27 Mar 2010 9:58 pm
They should be renamed "INSECURE LOANS" instead of second charge loans now that they are in the FSA net.
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