More mortgage protection for vulnerable

The move will see the regulation of so-called second charge mortgages transferred from the Office of Fair Trading to the Financial Services Authority, so that consumers have the same level of protection for both their main mortgage and a second charge loan.

Measures will also be put in place to ensure homeowners who run into difficulties continue to receive fair treatment, even if their mortgage has been sold on to an unregulated firm by their lender.

The Treasury also plans to tighten up the current regulation of firms offering sale-and-rent-back schemes to ensure all companies that are active in the sector are covered by the rules.

Financial Secretary to the Treasury Mark Hoban said: "Giving the FSA responsibility for the whole residential mortgage market will simplify the mortgage regulation landscape for consumers and lenders.

"This will ensure that existing second charge mortgage borrowers who fall into arrears or face repossession on both first and second charge mortgages benefit from being regulated by a single organisation, maximising consumer protection and ensuring a more co-ordinated approach between lenders.

"The measures on mortgage books and sale-and-rent back have been introduced to address a genuine gap in the regulatory architecture, and will ensure consumers will be better protected in the mortgage market."

Second-charge mortgages enable people who already have a mortgage on their home to borrow additional money secured against their property. The loans are often used for debt consolidation.