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Davies vows to review Treasury loan decision

FSA chairman Howard Davies has promised to conduct a rev-iew of the Treasury&#39s decision not to regulate mortgage adv-ice very soon and could recommend regulating advice if the current set-up is not working.

Davies&#39 comments before the Parliamentary Treasury select committee this week mark a departure from previous FSA statements.

The regulator has said in the past that the decision not to regulate advice was made by the Treasury without its input but it is now to take a more hands-on approach.

Davies told the committee that the review will look at ways to implement mortgage regulation in a “smarter and more cost-effective way” than the current proposals.

Davies was asked by Liberal Democrat MP David Laws whe-ther the decision not to include loan advice in the regime has made it difficult to implement the Government&#39s plans.

He replied that it has created some difficulty with trade associations such as the Council of Mortgage Lenders, who do not approve of the regime.

The FSA says the entire regulatory framework will be rev-iewed and not just advice.

Davies said: “There is a case for reviewing this regime very soon to see if it is delivering. If not, then regulating advice would have to come back on the agenda.”

Laws says: “It did seem from the answer he gave, he is convinced of the need for the FSA to get involved in the regulation of advice. He went a lot further on the subject than I expected him to.”

At the meeting, committee chairman Labour MP John McFall said the FSA&#39s report into the Equitable Life debacle would be published this week. There had been concern that the report, expected to be rel-eased in the summer, would not see the light of day because of Lord Penrose&#39s independent inquiry into Equitable.


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