Treasury second-charge plans 'would help borrowers'

By Sarah Engle, Tue 1 Dec 2009 - Published in Loans

Recent proposals from the government will create a "more level playing field" for borrowers, an expert has claimed.

Last week, the Treasury unveiled plans to strengthen the protection offered to mortgage borrowers by making second-charge loans fall under the remit of the Financial Services Authority (FSA).

Robert Sinclair, director at Association of Mortgage Intermediaries, said that second-charge mortgages are currently regulated by the Consumer Credit Act, which does not require the same level of documentation as a standard home loan.

The expert added that the proposals will help to create a more consistent regulatory regime and will make it easier for people to compare the various forms of borrowing.

"This will help people understand about what the different kinds of borrowing are. Because the documentation would then be similar, it will become clear what the charges are to their property," he explained.

However, Mr Sinclair also said proposals to make mortgages sold to a third party fall under the regulation of the FSA could be difficult to apply, as the rules would have to be implemented retrospectively in the majority of cases.

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