Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what (a) correspondence and (b) other information his Department holds on the basis on which the Economic Secretary to the Treasury decided not to take forward the Financial Services Authority regulation of administering a regulated contract on 2 January 2013.

In January 2011, the Government announced its intention to introduce further regulation in relation to the sale of regulated mortgage contracts to unregulated firms. Following a review, the Government decided that it would not take forward legislation but would instead keep the position of contracts sold to unregulated firms under review and return to legislation if there was sufficient evidence of consumer detriment.

The Government remains open to further regulation but is yet to see evidence that any consumer harm has occurred under the current regulatory regime that would have been prevented by the proposed regulation. Under the current regulatory regime, firms administering regulated mortgages, including third-party administrators, must be regulated. This means that they are subject to relevant provisions of the Financial Conduct Authority’s Mortgage Conduct of Business requirements, including provisions regarding the fair treatment of customers in arrears. It is also worth noting that further regulation of this kind would not necessarily enable borrowers to switch to a cheaper mortgage deal or to materially lower the interest rates they pay.