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Time to support a new code of conduct

The FSA was supposed to issue “near final” rules for mortgage regulation by the end of June. It&#39s now August. Delays in Gordon Brown&#39s Treasury department mean that we will have to wait to see just how the FSA&#39s plan to regulate mortgage advice will pan out. Current thinking is that the FSA&#39s consultation paper will be published at the end of this week.

One of the great failings of the initial proposal to regulate advice was that the buy-to-let sector was excluded. Buy-to-let already falls outside the remit of the Mortgage Code on the basis that products are commercial. But, unlike mainstream commercial mortgages where demand is usually from professional borrowers, there is a high proportion of so-called amateur landlords who are not financially astute.

But as we reveal on page 4, the National Association of Commercial Finance Brokers has produced a voluntary buy-to-let code of practice that, if followed, will go a long way to reassure your clients that they are receiving truly professional advice. The NACFB wants sellers of residential investment mortgages to follow guidelines that will protect the borrower.

Mortgage Strategy applauds the efforts of the NACFB and urges lenders operating in this sector to throw their weight behind what can only be sensible suggestions about how to sell buy-to-let.

Keith Heron, NACFB chief executive, has already secured the full backing of Tony Ward, chief executive of Britannic Money, and John Heron, managing director of buy-to-let specialist Paragon Mortgages. Both men also hold influential positions within the Intermediary Mortgage Lenders Association. So we can only hope more lenders and trade bodies such as IMLA and the CML follow suit and endorse this code of practice.

Of course, had the Treasury included buy-to-let inside mortgage regulation from the outset, then none of this would be necessary.

The sale of buy-to-let mortgages should be regulated. Lenders Southern Pacific Mortgage Limited and Birmingham Midshires Solutions – part of the mighty HBOS – have already gone on record saying the same. Buy-to-let regulation could still be on the Treasury&#39s agenda. As John Heron says: “Even when there is an effective system of self-regulation in development there is no guard against the regulatory steamroller.” But until that time comes – and one day it will arrive – the efforts of the NACFB should be given full industry support.


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