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MCCB finds protection gap on loans

The Mortgage Code Compliance Board has highlighted a gap in consumer protection if the Financial Ombudsman Service is not authorised to rule on complaints relating to mortgages purchased before FSA regulation starts next October.

Chairman Colin Harris says the current position is that, post-regulation, consumers with mortgage complaints will be able to turn to the FOS. However, those who take out mortgages before statutory regulation starts will not be covered once the MCCB hands over to the FSA.

He says the FOS should be empowered to rule on consumer complaints about mortgages taken out under the code, otherwise these people will have nowhere to turn for redress.

The Treasury is about to consult on this issue and Harris is calling on the industry to support the MCCB&#39s stance. The FOS says it is up to the Government to change its mandate and it awaits the outcome of any consultation.

Harris says: “There will be a big gap in consumer protection if the ombudsman is not empowered to rule on consumer complaints about sales made under the mortgage code which arise after statutory regulation commences.

“The FOS&#39s remit should include mortgages taken out under the code. The Treasury is consulting on this and we need a positive response from the industry and from consumer bodies.”

Mortgage Intelligence managing director Sally Laker says: “If consumers are to be protected, then someone needs to take these complaints under their wing. It would only be logical for the FOS to do this as this is what has happened in the past.”


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