Response: HM Treasury consultation on financial reform

By: Robbie de Santos  Published: September 2011


Shelter welcomes the opportunity to respond to the Treasury’s consultation: A new approach to financial regulation: the blueprint for reform. We broadly welcome the government’s proposals to improve financial regulation, which is of interest to Shelter because we know that poor financial regulation allowed risky mortgage lending and unfair treatment of mortgage borrowers by some lenders. This had negative consequences for individual borrowers, the housing market and the wider economy. As such, Shelter broadly welcomes the consumer protection proposals set out by the Treasury, which we believe could help to prevent the scale and the severity of the irresponsible practices we witnessed in the build up to the financial crisis.

Summary

Reckless mortgage lending saw many thousands of households lent mortgages that they had no hope of ever paying back, placing borrowers in dire financial straits. The practice of securitisation, where mortgage books were sometimes sold on to unregulated third parties who had no obligation to treat struggling borrowers fairly, led to macro-economic instability and also direct consumer detriment. We have also seen a sustained period of arrears and repossessions, partly dampened by low interest rates and increased regulatory scrutiny.

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