Nationwide head of mortgage strategy and policy Andrew Baddeley-Chappell says the FSA should be looking to regulate the investment advice given to buy-to-let borrowers rather than the mortgages under MCOB.
He said the investment advice given to borrowers is the main problem in buy-to-let mortgages.
Baddeley-Chappell said: “The mortgage is not the issue – the mortgage is a facilitator and an important part of the transaction but when things went wrong in buy to let, on the whole, it was not because the mortgage was going wrong, it was because of a poor investment decision and the returns they expected have not come through.
“I think there are also features specifically around the nat-ure of buy to let and the type of properties being bought and the way they were being sold that made this market over-vulnerable.Our view is that if you want to regulate buy to let, you should regulate the investment advice process.”
Council of Mortgage Lenders head of policy Jackie Bennett said: “Buy to let is an investment decision and I think that is how you need to define it.”