Bringing financial promotions for all secured loans under the responsibility of the Financial Services Authority could be the first step towards the regulation of second charge lending.
The Financial Services Authority is due to consult on changing its rules so advertisements subject to dual regulation will only have to contain one risk warning. It is believed within the finance industry, that the Financial Services Authority will have to take more ownership of secured loans, and if not, they risk being in breach of the Market in Financial Instruments Directive (MiFID) which comes into force in the UK next year, bringing the UK into line with the regulation of financial services in the rest of Europe.
In Europe, all secured lending is categorised as mortgages, while non-secured lending is considered to be consumer credit. It is believed that the introduction of MiFID will see the Financial Services Authority taking responsibility for secured loans, while consumer credit will become the responsibility of the Office of Fair Trading.
Our view
All lending financial services contracts should be regulated, whether it is loans, insurance, credit cards, mortgages or pensions.