Regulation of Financial Services (Land Transactions) Bill

I agree with my hon. Friend and pay tribute to his work in raising the profile of these issues and ensuring that the Bill responds sensitively to consumers’ needs. The Bill will remove the current imbalance between the regulation of murabaha products and the lack of regulation of ijara products. It will ensure proper protection for all consumers who choose to use non-interest bearing products for reasons of conscience—other consumers may feel the same way as members of the Muslim community about such products. The Bill will allow us to bring flexible tenure products into the scope of regulation, if that becomes necessary or desirable in the future. At present, providers of such products are exempt from FSA regulation, as they are registered social landlords. In response to the consultation, however, we have undertaken to consider the regulation of those products, if private providers enter the market in the future. Any action to introduce regulation in that area would be subject to a rigorous cost-benefit analysis and would require secondary legislation. I hope that hon. Members now have a clearer picture of the characteristics of the products that form the focus of the Bill. The FSA assumed responsibility for the regulation of first-charge mortgages secured on a purchaser’s primary residence from 31 October 2004. The Government’s decision to regulate in this area was announced by the then Economic Secretary in December. The decision was taken to ensure that people had adequate protections when they made what for many is one of the most significant financial decisions of their lives. The size of most mortgage loans, combined with the long repayment cycles and the fact that default can mean the loss of family homes, means that they are qualitatively different from other common financial products and as such require particularly rigorous and careful regulation. The Government’s decision to regulate was broadly welcomed by both the industry and consumer groups.