The FSA’s Product Intervention Discussion Paper, which closed towards the end of last month, raised some important points that need to be addressed by the industry, such as how far along the spectrum of earlier and more intense interventions should a regulator progress?

There is a crucial balance to be achieved between increased protection and reduced choice for consumers.

IMLA members have deep experience of mortgage product development and the sales process, since it is this market segment that has led innovation in the market place. It has responded to unmet needs as uncovered by intermediaries through their advice and sales processes and subsequent product development by lenders.

In our view, product intervention is both unnecessary and unhelpful.

With upgraded prudential requirements, business model oversight and stronger and more effective conduct of business rules, including TCF, we see this additional layer of protection as a step too far.

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In addition, it takes the FSA into territory where it is not well equipped for the task.

Moreover, it is evident from the remit of the new Financial Policy Committee that this body will play a role regarding product limitations in the event of identified systemic risks in the UK housing market.

It is also unhelpful in that it will blunt the competitive/innovative edge of the UK mortgage market at a time when the market, which has become quite risk averse reflecting both circumstances and new measures, is being asked by government and society to be bold and more innovative.

We remain deeply concerned that the layering of regulation and controls is continuing apace, not least via the European Directive.

It is essential the FSA takes a full view of the controls in place and emerging before it proceeds to add more. Indeed, if the FSA misjudges this, it runs the risk of further shrinking the UK mortgage market which in turn might drive a further significant price correction.

Ultimately, the regulatory structure will be a key determinant of the shape of the UK’s housing and mortgage market and, through that, the shape and direction of UK society in terms of access to and use of property assets.

At this stage, there is little to suggest the FSA has fully recognised its partial but still significant ownership of this considerable responsibility.

In some senses, it is only with a fuller picture of where government and regulators want the market to go that we can resolve the shape of product structures and product sales.

John Heron is chairman of IMLA