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FSA fudges answers on mortgage market problem areas

  • 14/03/2012
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FSA fudges answers on mortgage market problem areas
The regulator struggled to answer questions on mortgage market trouble spots including enforcement, the disproportionately high level of arrears among Right To Buy borrowers and sale and rent back in a Treasury Select Committee hearing today.

The Committee grilled the FSA chairman Lord Turner and Martin Wheatley, the FSA’s newly-appointed managing director for the conduct of business unit, for over an hour and a half this morning, but the regulator promised to respond later on several key issues.

Wheatley (pictured) was asked how many enforcement actions the FSA had taken this year by Teresa Pearce, MP for Erith and Thamesmead. Wheatley reserved the right to come back to her later with a response.

Wheatley responded to another Committee member Labour MP George Mudie’s question on whether the government had consulted it before raising the discount rate cap on Right to Buy (RTB) to £75,000 that it hadn’t. Then, under further questions from Mudie, Wheatley agreed RTB arrears levels were substantially higher than the mainstream mortgage market average but he said he didn’t know what they were and would have to come back with details later.

Mudie called the FSA’s lack of proposals and answers in this area shocking.

Both FSA bosses confessed they were aware HSBC had reduced its conveyancing panel to just 43 after a question from Mark Garnier, Conservative MP for Wyre Forest.

Garnier suggested the loss of consumer choice and higher fees were a high price to pay and asked if this was a direct effect of the MMR, which Turner denied, although he said he would come back on this. He added it was more likely to be the indirect consequence of the fight against fraud by many mortgage lenders.

Finally, on sale and rent back, Labour MP, Andy Love asked Lord Turner when the victims of Sarb would receive compensation and given the fact the FSA began regulating the sector two years ago, he asked, why did the clampdown take so long?

Neither Lord Turner nor Martin Wheatley were able to answer and promised to come back later with a response.

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