Economic secretary Ruth Kelly has set out the reasons for statutory regulation of mortgage and general insurance intermediaries and advice.
"Buying a mortgage is the biggest financial decision of most people's lives, they need to get it right and high quality understandable advice is crucial. Regulation will ensure a high standard of advice is available across the board to the large number of people, 1.2 m in 2000, who take out mortgages every year. In the rare and unfortunate cases where things go wrong the Financial Ombudsman will be the single body for handling customer complaints.
"DeAnne's review highlighted areas where improvements should be made to benefit banking customers. There has been a very constructive response with the majority of the recommendations being accepted by industry. The measures being taken forward will benefit customers, for example through making account switching easier and stimulating competition in personal banking.
"The Julius Review group argued that mortgage advice should be regulated, echoing the sentiments of many consumer groups and industry. We have listened to these views and after reviewing the policy believe regulation will bring benefits to both consumers and businesses.
"Many of the 12,500 UK mortgage brokers also sell general insurance. In order to maintain a consistent and streamlined approach, the sale of general insurance products will be regulated by the FSA. Brokers who deal in two or more lines of regulated business will deal with a single regulator, not several, and will be able to compete in European markets. Additionally the Government will look at insurance sold as part of a package with another product – for example, travel or extended warranty to consider the implications of the new regime for them.
"Today's measures will benefit industry by simplifying and streamlining regulation. The watchword in developing the new frameworks will be proportionality. We and the FSA will be working closely with the industry and others to design a regime that understands the market, and is targeted precisely at maximising benefit to the consumer, and not loading industry and ultimately the consumer with unnecessary costs."