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Buy to let slips through FSA&#39s net

The Treasury has been criticised for excluding certain types of lending from the FSA&#39s remit amid warnings that this will leave consumers without protection.

The main area of concern for many brokers is buy-to-let mortgages as the Treasury is sticking to the view that these are commercial transactions. The decision comes despite the FSA voicing concerns about the volatility of this market.

Broker club and sourcing platform Mortgage 2000 argues that buy to let should be regulated in the same way as residential mortgages and IFA Savills says it is disappointed that at least some of the buy-to-let market is not falling under the FSA&#39s regime.

But the CML supports the Treasury in excluding buy to let and not treating it as a residential mortgage.

Charcol is concerned that regulation will not be extended to equity-release reversion schemes and second-charge mortgages taken out by people wanting to raise income quickly rather than applying for a remortgage.

Senior technical manager Ray Boulger says an equity-release mortgage may be more appropriate to a client originally interested in a reversion scheme, so a broker must be able to advise on the whole market. He warns there is a danger of repeating the equity-release scandal of the late 1970s.

UCB Home Loans PR manager Allen Bruce says: “Buy to let is clearly a mortgage product and we are surprised it has been excluded as it is falls in a gap between investment regulation and residential mortgage regulation.”

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