Abstract
This article contends that the UK government’s attempt to create a well-functioning consumer credit market will be undermined if it fails to reform the private law framework relating to the first legal mortgage. Such agreements are governed by two distinct regulatory regimes that are founded upon very different conceptions of the mortgagor. The first, the regulation of financial services overseen by the Financial Conduct Authority, derives from public law and is founded upon a conception of the mortgagor as “consumer.” The other is land law, private law regulation implemented by the judiciary and underpinned by a conception of the mortgagor as “landowner.” Evidence suggests that the operation of these two regimes prevents mortgagors from receiving fair and consistent treatment. The current reform of financial services regulation therefore will change only one part of this governance regime and will leave mortgagors heavily reliant upon a regulator that still has to prove itself. What this article argues is that reform of the rules of private law must also be undertaken with the aim of initiating a paradigm shift in the conception of the mortgagor from “landowner” to “consumer.” Cultural shifts of this kind take time, but the hope is that this conceptual transformation will occur in time to deter the predicted rise in mortgage possessions.
Highlights
The rhetoric of “consumerism” (Hilton 2003, p. 1) has been prevalent within government housing policy since the early 1980s and has manifested itself in the form of the transference of the responsibility for the provision of housing from the state to the individual within a free market system
The exemption of first legal mortgages from the majority of the provisions of the Consumer Credit Act 1974 has been a matter of concern for government (Department for Business, Innovation and Skills 2009, para. 1.2.2; Ministry of Justice 2009), consumer organisations (Citizens Advice 2009) and scholars (Brown 2007) for a number of years
This concern derives from the perception that the CCA 1974 regime was much more protective than the protection offered to first legal mortgagors
Summary
The rhetoric of “consumerism” (Hilton 2003, p. 1) has been prevalent within government housing policy since the early 1980s and has manifested itself in the form of the transference of the responsibility for the provision of housing from the state to the individual within a free market system. Unless and until land law recognises that both the use and user of mortgage finance have changed, mortgagors will continue to receive less protection than consumers of non-essential goods, a situation that is wholly unjustifiable given the move to a mass home ownership market. In pursuit of this argument, this article will begin by setting the context of the modern mortgage relationship through an account of the “privatisation” In pursuit of this argument, this article will begin by setting the context of the modern mortgage relationship through an account of the “privatisation” (Daunton 1987, p. 5) of the housing market
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