At a select committee Budget inquiry on Tuesday, McFall, Labour MP for West Dunbartonshire, said bureaucracy was preventing lenders from signing up to the scheme.
He said: “I have spoken to building societies and banks and they tell me this is a hugely bureaucratic scheme where they are having to sign something like 200 pages of paper.”
He said the Treasury should redesign the scheme and added: “When we do face tougher times and increased unemployment and people are getting repossessions, we can have a scheme that is fit for purpose.”
Treasury public spending director James Richardson said: “We are happy to look at it in light of the views of the committee but banks and building societies covering 80 per cent of the mortgage market are offering comparable terms.”
Savills Private Finance director Melanie Bien says: “It has been a quite disappointing number of lenders that have signed up. It is a shame as they have had a opportunity which has not been taken.”