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A call for a period of certainty in the mortgage market – Paradigm

by: Bob Hunt, chief executive of Paradigm Mortgage Services
  • 26/01/2016
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A call for a period of certainty in the mortgage market – Paradigm
Paradigm's Bob Hunt explains why the UK mortgage market needs a period of respite from constantly changing rules and regulations.

When I read recently about the CML’s call on the regulator for a period of stability in the mortgage market, I couldn’t help but recall the parable of the snake.

For those that don’t know, this parable focuses on a snake injured in a fight with another animal, which is nursed back to health by a benevolent individual. The snake ‘thanks’ this man for his kindness by biting him. When asked why, the snake effectively replies, “What did you expect? You knew I was a snake when you picked me up.”

I should firstly point out that, when it comes to the CML’s suggestions, I am firmly in agreement. I too believe that the industry is almost crying out for stability, rather than another uncertain period where the rules and regulations could be changed again with little notion about the true consequences for all stakeholders.

The problem as I see it, and I am not suggesting the regulator is a snake here, but we have to look at the nature of regulators. What do they do naturally? They regulate and therefore it seems somewhat fanciful that they would roll back any of that regulation, the chances are that they will actually add to it, rather than take it away.

Which unfortunately does leave the market in a state of constant flux. Especially when you add in the European dimension that guides much of our own regulation plus the UK’s own political machinery and the government priorities and policy changes which also impact greatly on our sector.

It also means that, for many firms, resources which perhaps could have been divested in ways that would benefit the customer and their journey, are actually spent on preparing and delivering those regulatory changes. The mortgage market is itself the home to naturally innovative business. But has that innovation been allowed to thrive in recent years, when regulated firms are required to work towards and within such tightly prescribed rules and rule changes? I suspect not.

This is not a call for a more open-ended regulatory system; the post-credit crunch period and subsequent recession required a lot of change to stop the excesses of those ‘boom years’. However, it’s still my hope that, in lieu of any further EU-led regulatory developments, the market can ‘enjoy’ a degree of certainty about what it is dealing with over the next year or so.

The benefits of such a period would be many and would give all practitioners the opportunity to establish strong businesses, develop effective propositions, improve efficiencies and innovation in a marketplace free of any potential, nasty snake-like surprises.

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