The BSA has called on the regulator to focus its attention on areas displaying strong evidence of failure and to consider the wider impacts of further regulatory upheaval.

Paul Broadhead, head of mortgage policy at the BSA, said: “The concerns identified relate to a small proportion of firms, whose practices do not reflect the rest of the industry. We therefore do not think it is appropriate to amend the rules for all due to the failings of a few.”

“If the FSA chooses to take a very prescriptive approach, this could mean many existing borrowers, who are already successfully repaying their mortgages, will find it difficult to remortgage in the future – or in some instances get a new mortgage at all – while many future borrowers will be deprived of the opportunity to take out a mortgage.

The BSA also warned that extending its regulatory regime beyond advisers would have significant cost implications on lenders, while delivering little or no benefits to consumers. Consultation on these proposals will close on 25 April 2010.

Broadhead added: “Though showing some signs of recovery, the UK mortgage market remains fragile. It is crucial that the Government and regulators take stock of the current suite of regulatory interventions and consider the aggregate impact of these reforms before bringing in new requirements.”

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