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Economist Julius seizes on Treasury over the gaps in mortgage regulation

A Government-backed report written by a leading economist has slammed the

Treasury&#39s decision not to regulate mortgage advice as a failure to protect

consumers.

The report, issued this week by the Banking Services Consumer Codes Review

Group led by Bank of England economist DeAnne Julius, blasts the proposed

statutory framework for failing to plug regulatory gaps.

Stating that advice “sho-uld have been regulated”, the group is calling for the mortgage code to be str-engthened by November to try and patch over deficienci

es and is pushing for a full review once the FSA rules are finalised.

It also wants to ensure borrowers advised by brokers have the same level

of protection as those going direct to lenders by pushing for

intermediaries to come under the jurisdiction of the Financial Ombudsman

Service at N2 when the FSA gets its full powers.

But although the Mortgage Code Compliance Board welcomes – and proposed –

many of the recommendations, chief executive Luke March is ques- tioning

the proposal that firms should be given compliance ratings.

This would entail the MCCB having to brand firms with good, average and

bad ratings on the basis of its compliance visits but as the regulator has

14,000 brokers to oversee, March is dubious about the practical application

of implementing the recommendation.

Julius, speaking to Money Marketing, says: “The view of the group is that

advice should have been regulated.”

Treasury economic secretary Ruth Kelly says: “We take the Julius report

comments seriously and we will give them close attention.”

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