The industry currently comes un-der the auspices of the Office of Fair Trading and the Consumer Credit Act.
The AFB’s White Paper sets out the regulatory options for the industry, which comprise staying with the OFT and CCA or accepting FSA regulation.
Robert Sinclair, director of the AFB, says: “It is vital that we take a pro-active approach to regulation of our industry to ensure the best outcome for brokers, lenders and most importantly consumers.
“We must put consumers at the heart of any reform and ensure their needs are served. Consumers and consumer groups are likely to see FSA regulation as positive.”
Sinclair believes improving the image of second charge lending could lead to greater awareness of the sector and increased client interest in its products.
He says: “We have already been in discussion with the government and the regulators and they are keen for the industry to reach its own conclusions. If not, we will have that power takenout of our hands.”
But the Finance and Leasing Association, which runs a focus group for secured loan lenders, does not echo Sinclair’s views.
Fiona Hoyle, head of consumer finance at the FLA, thinks change is unnecessary.
She says: “The second charge mortgage market is already regulated by a comprehensive statutory regime delivering consumer protection.
“In the current economic climate, the focus should be on providing practical assistance to customers in financial difficulties via industry best practice, an approach supported by the government.”
But Angelo Trapasso, director of master secured loans broker Magic Loans, thinks FSA regulation is unavoidable.
He says: “I think it’s inevitable but at the moment we must concentrate on the global economy’s problems.”
Q: Do you think the government’s mortgage rescue plan will stimulate the housing market?