The Consumers' Association and the Council of Mortgage Lenders have expressed serious concerns over the FSA's decision not to regulate mortgage advice.
Their criticism comes in response to the FSA's consultation on mortgage regulation, which ends this week.
The failure to include mortgage advice under the regulatory umbrella forms the biggest objection within their responses although both bodies are also critical of the fact that there will be no single regulatory body. Under the current proposals, mortgages will be regulated under both the FSA and the Consumer Credit Act.
The CA and the CML suggest another stumbling block towards regulation is that it is still unclear what the actual definition of a mortgage is, leading to confusion over who regulates what.
The CML says that, bec ause of the short time period the FSA and Treasury allowed for public responses, there is a danger that crucial areas may be overlooked until after regulation becomes a reality. The Treasury's consultation ended on December 20.
The CA also has problems with timing and it is concerned that regulation is not expected to come into operation until 2002. It says consumer interests are being damaged by the length of delay before the FSA brings in regulation.
CA public affairs officer Delroy Corinaldi says: “There should be a one-stop shop for mortgage regulation wherever possible because it limits consumer confusion. It is a real travesty that the Treasury has failed to regulate mortgage advice.”
CML communications manager Bernard Clarke says: “We continue to have concerns that the will not be a single regulatory framework for residential loans and that mortgage intermediaries will not be authorised by the FSA.”