The Financial Services Authority, the Government's mortgage regulator, has officially proposed to regulate the secured loans market.

In its mortgage discussion paper, the FSA said that it was time to add secured loans into the same remit as first charge residential mortgages.

The report said: "Second charge lending potentially provides a cost-effective borrowing option as an alternative to either remortgaging or taking out a further advance. This is particularly the case where there might be significant early repayment charges on the first mortgage. It is also a market associated with consumers looking to borrow in circumstances when a first charge lender may be unwilling to lend. Not all second charge consumers will be credit-impaired, but a substantial number will be.

"We firmly believe that effective delivery of a stable and sustainable mortgage market calls for [regulatory] standards to apply across all secured lending to consumers."

Jon Pain, managing director of the FSA said: "The reforms that we have announced will ensure that the mortgage market works better for consumers and that it is sustainable for firms."

Sue Edwards, head of consumer policy at Citizens Advice says: "Citizens Advice welcomes the proposals outlined in this review. In 2009 bureaux dealt with over 95,000 enquiries about mortgage and secured loans arrears – up 49% on the previous year. We would like to see uniform consumer protection for all secured lending and for the FSA's scope to cover this, as well as lending secured on a home."

So what does this mean to secured loan borrowers, past, present and future? It means that you can be sure that your loan has been sourced, applied for and approved through official sanctioned methods and you can be sure that it is the best deal for you, for the long-term.

SOURCE: FSA CAB, 19/10/09

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog.