Video transcriptA public consultation has been launched by the Treasury that will seek the views of members of the public regarding the implementation of new powers for the Bank of England.
Outlined in the consultation are the government`s plans to provide additional regulatory powers to the Financial Policy Committee, or FPC, within the Bank of England to identify, monitor and take action to remove or reduce systemic risks that could arise within the buy to let sector in the years ahead.
These powers would form part of FPC`s macro prudential toolkit and concern an increased level of oversight for the UK`s buy to let mortgage segment. This would include the ability to direct both the Prudential Regulation Authority and the Financial Conduct Authority to require regulated lenders to place limits on buy to let mortgage lending based on certain criteria.
These measures would include loan-to-value ratios for borrowers, as well as interest coverage ratios.
It is hoped that these new powers will provide additional protection for both consumers and the industry in the years ahead, while at the same time helping to protect and enhance the resilience of the nation`s financial system as a whole.
The consultation includes draft legislation and a full impact assessment of its proposed new powers for the Bank of England.
Responding to its launch, the director general of the Council of Mortgage Lenders argued that the rationale for putting these additional macroprudential tools at the disposal of the Bank of England does make sense.
However, he went on to add that, in his opinion and that of the CML, the `buy to let [segment] does not constitute a market that currently requires further macro prudential intervention, especially as the effect of several recent tax changes is yet to be fully felt and evaluated`.
As a result, the body has urged the government to `be mindful` of any potential unintended consequences to the buy to let mortgage market - and to borrowers up and down the country - of these changes, ensuring that the future operation of the nation`s buy to let sector does not pose a threat to sustained financial stability for the UK.
Anyone interested in giving their views on the potential new powers for the Bank of England now had until March 11th to issue their response.
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