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Wednesday, September 29, 1999 Published at 15:26 GMT 16:26 UK

Business: Your Money

Mortgage lenders face summit quiz

Home-buyers will have greater protection, says Mr Byers

Mortgage lenders will be made to answer for their treatment of borrowers, a government minister has pledged.

Bank and building society chiefs will be summoned to a "summit" with Trade and Industry Secretary Stephen Byers.

Mr Byers told the Labour Party Conference in Bournemouth borrowers deserve a fair deal.

"The real options and penalties must be spelled out," he said.

[ image: Stephen Byers: banks will come to a summit]
Stephen Byers: banks will come to a summit
Lenders have been criticised for imposing charges without having made clear to borrowers in advance exactly what they would owe under conditions such as lock-in clauses.

They have also come under fire for selling inappropriate mortgages.

Mr Byers told the conference: "Next month I will be holding a mortgage summit with the major banks and building societies to identify the steps they need to take to discharge their responsibilities."

"Tories turned their back on the scandal of pensions mis-selling. Our government will act to stop mortgage mis-selling," he pledged.

At the summit, Mr Byers will demand to know why repeated interest rate cuts by the Bank of England have not been followed by rate falls in the high street.

Regulation of mortgage lending is already being considered by Parliament. The Financial Services and Markets Bill gives ministers powers to bring mortgages under the control of the Financial Services Authority.

[ image: The myriad of mortgages on offer can be confusing]
The myriad of mortgages on offer can be confusing
At present anyone can set themselves up as an estate agent and there is only a voluntary code of practice drawn up by the Council of Mortgage Lenders.

Two days before Mr Byers's speech, the Council of Mortgage Lenders said it wanted to simplify the current patchwork of regulation into a single framework under the new Financial Services Act.

The Consumers' Association also says home lending must be brought within the remit of the Financial Services Authority.

Earlier this month the Office of Fair Trading warned estate agents against unfair practices such as pressuring homebuyers into buying mortgages and other financial services.

And the Local Government Association said an investigation found 95% of mortgage brokers were breaking the voluntary code of practice.

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