We reported recently that the Financial Services Authority (FSA) has proposed several changes to the way mortgages and other types of home owner loans will be regulated in the future, under its Mortgage Market Review, including an additional set of new regulations which will see previously unregulated secured loans and buy to let loans become fully regulated by the FSA in the same way as other home owner loans, more responsibility placed on loan brokers, intermediaries and lenders to confirm loan affordability for borrowers, as well as a complete ban of self certification loans and mortgages.

The Council of Mortgage Lenders (CML) has welcomed some areas of proposed regulation, but is unsure of the benefit of regulating other proposed areas of loans.

The CML has welcomed the news that secured loans, or second charge loans, are to be fully regulated in the same way as mortgages are currently, as many borrowers have faced repossession problems in the recent past through their second charge loans rather than their main mortgage. With regard to the regulation of buy to let loans, the CML believes this will have little benefit to the sector and could even be detrimental to professional buy to let investors. If the regulation is intended to offer protection to inexperienced property investors making bad choices, then the sale process should be regulated, not the available loan products.

Michael Coogan of the CML said “We will now study the Treasury consultation paper in detail, in parallel with the FSA’s consultation on potential changes arising from the Mortgage Market Review. 2010 is clearly going to be a year of regulatory change for mortgage lenders, but it’s important that change should have a clear rationale and a clear set of outcomes and not be implemented simply for its own sake as a reaction to past events that conduct of business regulation would not have prevented.”