What is the government proposing?

In essence, they've decided to regulate mortgages.

An independent watchdog, the Financial Services Authority, will authorise all mortgage brokers. It will also regulate mortgage advertising and require all the main facts of the loan to be disclosed.

It will have powers under the Financial Services and Markets Bill, now passing its committee stage in Parliament, to inspect firms.

Miscreant lenders will be punished with fines or expulsion from the industry.

A secondary plan is to introduce a "CAT-standard" for mortgages. Those home loans which meet the Treasury's criteria on price and reasonable terms will get this as a sort of "quality mark" - a bit like a kitemark from the British Standards Institute (see below for details).

Why now?

Consumers groups and MPs have been pressing for proper regulation of mortgages for years.

The government announced in 1997 that the Financial Services Authority (FSA) would be in charge of regulating personal pensions and investments, but the Treasury put off a decision about mortgages after the lenders insisted they should be given a chance to regulate themselves.

The lenders answer - a voluntary Mortgage Code - is perceived to have failed.

Last year, surveys by trading standards officers and Which? showed that very few mortgage sellers were obeying their own rules in full.

The bill which will formally give the FSA its powers - The Financial Services and Markets Bill - is now going through Parliament. It already gives ministers the option to make mortgages part of the FSA's remit.

Today is the last day of the Bill's committee stage, and the last chance for ministers to amend the bill and take up that option.

Does that mean there has been no regulation until now?

Basically, yes - there's been no proper regulation until now.

The mortgage lenders say the voluntary code did amount to regulation. But it's rarely been enforced. In two years, only one firm has been fined under the code - and that was just two weeks ago. The FSA, in contrast, will be a statutory regulator. That means it will be independent, with the full backing of the law when it enforces its rules.

Before 1997, the Conservative government's view was that the mortgage market was highly competitive, and that regulation would stifle competition without improving the consumer's lot.

Why is the Consumer's Association disappointed?

The Consumer's Association wanted mortgage regulation to be as tough as the regime which already exists for pensions.

Pensions advisers have to justify every sale they make as "best advice".

The £15bn pension mis-selling scandal was caused by advisers giving bad advice, steering customers away from company pensions to personal pensions (which meant a big lump sum in commission for them).

If they hadn't had the "best advice" rule, the advisers wouldn't have been found guilty of mis-selling, and no compensation would have been paid.

The Treasury has backed away from the crucial move that even lenders expected - bringing in a "best advice" regime for mortgage advisers. Mortgage advisers - those in estate agents, building societies and banks who advise their customers on which loan to get - won't be subject to rigorous checks deemed necessary for pension sales.

What do the banks/building societies have to say about the plan?

They opposed this type of regulation until September last year, when they said they welcomed it.

Industry observers believe the change of stance was caused by pressure from the press and consumer groups.

The lenders were actually surprised that the reforms did not go further: they expected the same as the Consumer's Association.

What difference will it make to the consumer?

It is not clear. The worst rogue mortgage firms may leave the industry. The mortgage lenders will have to be clear about any catches in the small print.

But when a customer sits down to get a mortgage, there's no extra reassurance about the integrity of the person selling it to you.

If he or she is motivated by commission rather than your interests, there will be no regulator checking the advice you get is right.

What is the CAT-standard?

It stands for "Cost, Access and Terms". Mortgage lenders can produce CAT-standard loans only if they meet the Treasury's criteria of fairness.

Variable rate mortgages will have to charge interest no higher than 2% above the Bank of England's base rate (most current mortgages are within this band).

No redemption charges are allowed.

Fixed- and capped-rate mortgages can only have surrender penalties within the period of the fix (or cap).

The penalties can't be more than 1% of the loan for each year left of the fix period. So if your mortgage was a £100,000 loan, fixed for five years, redeeming it after a year would cost £4,000.

The idea here is to increase competition by making it easier for people to switch to other, better deals. But the CAT-standard is voluntary: it's up to the homebuyer to look out for it.