Background to regulation of loans is complicated

From Stephen Atkins

I agree with the article, ‘Loans regulation predicted’ (Mortgage Strategy November 14), but the background is more complicated than described.

Back in 2000 the Treasury instructed the FSA to introduce regulation for first charge mortgages but for some reason second charges were excluded.

In 2005 the Hampton Report was published and suggested the FSA should assume responsibility for all Consumer Credit Act matters. Unsurprisingly the FSA said it had insufficient resources to regulate 80, 000 CCA licence holders. Impasse.

Mais non, as at this point we see a different approach from the EU, detailed in two green papers on consumer credit and mortgages. The EU definition of mortgages is all loans secured on land. You may not agree with everything in the green paper but the mortgage definition makes sense.

The Treasury will be consulting on all of this in 2006 and an easy solution would be to agree with the FSA’s request not to regulate CCA activity, with the exception of all loans secured on land. Or the Treasury may wait to see the introduction of European regulation of mortgages.