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Citizens Advice welcomes Government package to enhance consumer protection in the mortgage market

28 Ionawr 2011

Citizens Advice Social Policy Officer, Peter Tutton said:

"Citizens Advice welcomes the government's continuing commitment to ensure that people with mortgages, secured loans and sale and rent back agreements are protected against bad practices. We are pleased that the government is acting to close loopholes in the mortgage and sale and rent back rules that otherwise could cause serious detriment to homeowners.

“We also welcome the decision to bring secured loans and first charge mortgages into a single framework of consumer protection. The challenge now will be for the FSA to make sure that the rules for second charge loans build successfully on both the existing FSA rules for mortgages and the safeguards that were provided by the Consumer Credit Act".

The key points of the new package are:

  • ·The rules on activities regulated by the Financial Services Authority will be amended to ensure that consumer protection safeguards will apply to a firm buying existing mortgages from a mortgage lender. This means that borrowers whose mortgage is taken over by another firm will continue to be protected by FSA requirements to treat customers fairly and use repossession only as a last resort.
  • ·The regulations controlling sale and rent back providers will be amended to ensure that commercial providers cannot use a current exemption for agreements not made 'by way of business' as a way to get round FSA consumer protection rules. In future the exemption will only apply to genuine non-commercial sale and rent back agreements made with a close family member. All providers will have to be authorised by the FSA unless they can relay on another FSA exemption.
  • ·The FSA will take over regulation of second charge mortgages, which are currently regulated by the Office of Fair Trading under the Consumer Credit Act 1974

Notes to editors:

  1. The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  2. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  3. To find your local bureau in England and Wales, visit citizensadvice.org.uk. You can also get advice online at adviceguide.org.uk
  4. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers
  5. Citizens Advice Bureaux in England and Wales advised 2.3 million clients on 5.4 million problems from October 2013 to September 2014. For full 2013/2014  service statistics see our quarterly publication Advice trends
  6. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 3,000 service outlets across England and Wales.