Treasury releases regulation update

The Treasury finally published its overdue legislation for mortgage advice last week.

Ruth Kelly, financial secretary to the Treasury, says: “Buying a mortgage is the biggest financial decision most people will ever make. It is vital that they make the right choice – these regulations will make it easier to do that. We will not be consulting on the regulations further in order to allow the Financial Services Authority to begin consulting on their implementation.”

The FSA&#39s paper is expected to be published at 10am today.

Under new regulations broker packagers and correspondent lenders will be regulated but processing packagers and mortgage clubs will be exempt. Also, the FSA will now consider the links between polarisation and mortgages.

The Treasury also confirmed that the £5 cap on brokerage fees not leading to a mortgage contract will be “carved out” of the Consumer Credit Act.

As expected, buy-to-let remains outside the regulatory scope, as does second charge lending. Securitisation vehicles also stay outside regulation, as do home reversion schemes.

The appointed representatives regime will be extended to “advising” and “arranging” regulated mortgage contracts.

Proposals to exclude charities offering financial advice from regulation also still stand.

Housebuilders and estate agents will also be able to point customers in the direction of mortgage advice without being regulated themselves.

But critics say the Treasury&#39s legislative document amounts to just vague principles.

One source says: “This was meant to have been published at the end of June. There&#39s been over a month&#39s delay and for what? The Treasury has simply passed the buck to the FSA.”

•See news pages, 5, 6, 7, 8 and cover story, page 18