Securing a fair framework for homeowners
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22 October 2008
Today the Government announced new rules to help protect homeowners, who may
be facing the threat of repossession. New court protocols will help make
repossessions a last resort, and the Government is proposing that companies
engaged in sale and rent back schemes, which may target vulnerable home owners,
should be brought under FSA regulation.
The Master of the Rolls has today approved the Civil Justice Council’s new
protocol for the courts in mortgage repossession cases. This sets out clear
guidance on the steps that lenders are expected to take before bringing a claim
in the courts to ensure that repossessions are a last resort.
Lenders will now be expected to demonstrate that they have tried to discuss
and agree alternatives to repossession when borrowers get into trouble with
their mortgage repayments. If a case reaches court, lenders will be required to
tell the court precisely what they have done to comply with the protocol.
The Government will also be publishing a consultation paper on bringing sale
and rentback under FSA regulation, responding to recommendations from the Office
of Fair Trading’s (OFT) study into the Sale and Rent Back market which was
published last week.
Chief Secretary to the Treasury, Yvette Cooper said:
“We need to make sure we help those who might be hardest hit in the tougher
times ahead, ensuring repossession is the last resort not the first. We also
want to make sure that vulnerable homeowners are protected from exploitation and
Justice Minister, Bridget Prentice said:
"The new Civil Justice Council protocol forms part of a wider package of
measures which demonstrate this Government's commitment to provide the best
possible support to debtors and vulnerable borrowers. The protocol sets out all
the steps that a lender should take before issuing mortgage possession
proceedings. Lenders will be expected to consider ways of resolving problems
outside the court system so that mortgage possession claims are only brought to
court after all other suitable options have been exhausted."
Housing minister, Margaret Beckett said:
"We must ensure that every avenue has been explored before lenders seek to
repossess homes. These new measures will further protect the most vulnerable
households in the current economic climate. We have expanded free legal
representation in county courts for households at risk of repossession, we have
provided more free debt advice and will continue to work closely with lenders
through this difficult time. It is important that households who have concerns
over their mortgage seek advice at the earliest opportunity, starting by
speaking to their lender."
Consumer Minister Gareth Thomas said:
“We need to ensure that these vulnerable consumers are protected from
exploitation and know their rights.
That’s why we’ve responded so quickly to the OFT report and committed to
working with mortgage industry representatives and consumer groups, through HM
Treasury’s consultation, to determine the best way of regulating this emerging
The OFT market study on the sale and rent back sector, was published on 15
October 2008, and looked at the impacts, from the growing sale and rent back
market. The OFT report identified that there is potential for severe detriment
to homeowners entering into these arrangements and made three recommendations to
Government, including compulsory regulation, increasing consumer awareness and
improving information about housing benefits.
This is part of a range of initiatives to raise consumer awareness about the
risks around sale and rent back, and to help reduce repossessions. Actions have
been, or will be, taken to raise consumer awareness and provide help, for
- guidance to local authorities on eligibility for Housing Benefit to avoid
uncertainty surrounding eligibility of sale and rent back tenants for Housing
- expanded free legal representation in county courts for households at risk
- providing more free debt advice.
- joint guidance with National Homeless Advice Service for households facing
financial difficulties - 'Worried about your Mortgage? Get advice now' is
available from local authorities, courts and CAB offices.
1. The measures announced today build on the Government’s comprehensive
housing package announced in September, which included support for 6,000 of the
most vulnerable homeowners facing repossession through a Government mortgage
rescue scheme, and also further investment in reforms of support for mortgage
interest (SMI), which could help prevent a further 10,000 repossessions.
Further details of these measures are available below:
2. The Government asked the OFT to look at the sale and rent back market
earlier this year, working to an accelerated timetable, and to consider options
to strengthen consumer protections. The OFT reported on 15 October, and on the
basis of its findings, has recommended action in several areas.
3. The OFT published its report on the sale and rent back market study on 15
4. The Civil Justice Council is an Advisory Public Body, established under
the Civil Procedure Act 1997 with responsibility for overseeing and
co-ordinating the modernisation of the civil justice system. The CJC provides
advice to the Secretary of State for Justice on the effectiveness of aspects of
the civil justice system, and make recommendations to test, review or conduct
research into specific areas. More information on the CJC, including its
composition, can be found at the
Civil Justice Council website.
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Article Published/Sorted/Amended on Scopulus 2008-10-24 18:37:12 in Business Articles