In today’s banking white paper, the Government revealed that it would be investigating the mortgage book market as part of its assessment of mortgage market regulation in September 2009.
Last year Money Marketing reported industry fears surrounding unregulated firms, such as hedge funds, buying up distressed mortgage books for possible capital gain.
The white paper says: “The current economic conditions present new challenges and the Government is committed to ensuring that the regulatory system is robust and up to date. One such emerging trend, which could reduce protection for borrowers, is lenders in distress selling their mortgage books on to unregulated firms.
“The Government will consult later this year on the best way to protect consumers when lenders sell on mortgage books, with a view to bringing forward legislative measures if necessary.”
The white paper also reveals that the Government will convene an expert group of key stakeholders to advise on the strategic issues affecting building societies, including shared operating models and capital raising.
It states: “The work of this group will inform any future changes needed to develop a sustainable strategic framework for building societies, including measures to support investment and to enable building societies to build up additional core capital.”
Chancellor Alistair Darling says he will report on this at the pre-Budget report in the autumn.