Treasury stays silent on the rules regime it wants to govern market
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Firms selling secured loans may be governed by the same rules as first-charge mortgage providers under proposals put forward by the Treasury last week.
Mark Hoban, financial secretary to the Treasury, is to transfer the regulation of secured loans from the Office of Fair Trading to the Consumer Protection and Markets Authority when it replaces the Financial Services Authority at the end of 2012.
But it has not yet been revealed whether the Treasury will apply the existing Mortgage Conduct of Business rules to those in the secured loan market, produce new ones or transfer the OFT rules.
Robert Sinclair, director of the Association of Finance Brokers, says: “It is still not clear whether the Treasury will bring across the current OFT regulation, create a section in MCOB for secured loans or create a completely new MCOB.”
But he says the concept of FSA regulation is not entirely foreign territory to many brokers in the secured loan industry so implementing the new rules should not prove problematic for most.
Matt Tristram, director at brokerage Loans Warehouse, says: “FSA regulation is good for our industry and will undoubtedly usher in a new level of consumer confidence. We will be watching closely to see what impact the FSA will have.”
Steve Walker, managing director of Positive Solutions, says: “The extra cost and disruption of a new regime will hurt, especially at a time when margins are so thin and lenders are trying to evolve new products.”
But he says FSA regulation will lead to more mortgage brokers embracing the secured loan sector.
He adds: “When the FSA takes loans under its wing brokers will be forced to consider loans as part of the advice process and demonstrate they have done so.”
Fiona Hoyle, head of consumer finance at the Finance & Leasing Association, says it is concerned about the potentially short timescale allotted to make the transfer.
She says: “This will be especially complex for lenders’ back-books of loans which were granted under one regime and will now be regulated under a new one.
“A sensible timetable will be essential.”
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