A number of industry observers have in-sisted that secured loans should be regulated in the same way as residential mortgages.
Since Mortgage Day the effect of regulation on the market has been clear, but what has been less obvious is the indirect but positive effect it has had on the secured loans market and its increasing use by brokers.
We have worked hard over the past 12 months to convince advisers that secured loans are an appropriate alternative to remortgaging and there is no doubt that one of the factors which has worked in our favour is the effect of regulation on the residential mortgage market.
Direct regulation by the Financial Services Authority is unlikely. The Hampton report, published in March 2005, recommended that the government should consider the transfer of responsibility for consumer credit regulation from the Office of Fair Trading to the FSA.
But the response from both the OFT and the FSA was that the government had already considered this and, following discussions with stakeholders, had not proposed additional reforms to the consumer credit regime.
As it stands, the OFT and the FSA are of the opinion that formal regulation should not be on the agenda. But the bodies will work closely together and the OFT is strengthening its regulatory remit.
Changes to the Consumer Credit Act in 2008 highlight the extra teeth the OFT will have in terms of stronger vetting of applicants for consumer credit licences and statutory rights to enter the premises of CCL holders to investigatecomplaints and verify applications.
Perhaps the strongest hint we have of a convergence of regulatory ambition is that the Financial Ombudsman Service will handle complaints against CCL holders and all CCL holders will have to have in place a robust complaints procedure.
Mortgage regulation has given brokers a reason to widen their research and secured loans have become popular as an alternative to remortgaging. The changes to the law, along with changes already made concerning early repayment penalties, make an even greater case for the acceptance of secured loans in the mainstream market.