For Too Long the Financial Markets Have Been Too Powerful and Too Dominated by Self-Interest. Now They Must Be Channelled to Work in the Public Interest; WRITING EXCLUSIVELY FOR FINANCIAL MAIL, THE PREMIER REVEALS HIS MISSION FOR BANKS

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Byline: Gordon Brown

AS the UK economy recovers from the damage of the worldwide financial crisis, it is critical that we end those reckless banking practices that have left so many people worried about their personal finances.

Our priority is to give everyone a better, fairer deal. So we are taking extensive action to change the culture of the financial sector and to support, protect and empower consumers.

The key reform is to make sure banks and credit card companies never again encourage people to borrow more than they can realistically afford to repay. That is why we asked the Financial Services Authority to review the mortgage market and tomorrow it will bring forward proposals to stop irresponsible lending.

We believe that lenders should in future have to carry out meticulous disposable income assessments before agreeing any home loans. And particularly risky loans based on self-certified incomes must end.

In the past, too many homebuyers were sold high loan-to-value mortgages or high loan-toincome deals, where they were offered six or seven times their salaries.

This left many in huge difficulties when house prices fell or people suddenly lost their jobs or had their pay cut.

So to protect consumers, these packages must in future be offered only after rigorous checks to determine they are right for the borrower.

Meanwhile, those who get into financial difficulties through no fault of their own should not be treated unfairly - particularly by lenders rushing to repossess or hitting them with high charges for going into arrears, which only worsens their plight.

We have already instructed the courts to make sure repossession is always the very last resort and the rate in Britain is around half what it was in the last recession - and well below that in the United States. At present, 300,000 families are receiving support to stay in their homes.

BUT as well as making sure that banks lend responsibly, we also need to make sure that customers can be confident when they open a bank account that they will be treated fairly; that charges and fees are clear, easy to understand and reasonable; and that their savings are safe.

So from November 1 new regulations will come into force on how retail banks conduct their business. …