Mortgage News
CML conference: Post-FSA landscape will be more “complex”
The post-Financial Services Authority (FSA) regulatory landscape for mortgages is going to become more complex under the “twin peaks” of the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA, warned the Council of Mortgage Lenders.
Speaking at the CML Mortgage Industry Conference and Exhibition today, director-general Paul Smee said that while its likely that the regulatory framework for the mortgage market will become more complicated when the FSA is replaced with the PRA and FCA, there will be a new influence in the form of the Financial Policy Committee (FPC), part of whose remit will be to prevent asset bubbles.
Smee said: “Its remit is still opaque. Will it actually wield the instruments of deflation? Will those instruments be blunderbusses, scattering grape-shot or finely-tuned lasers? We do not know but I cannot help but observe that every time the FPC talks of its mandate it uses the example of mortgages as the market where it could see itself making an impact. So we need to know the terms of engagement.”
He added: “Regulators can exist in their own bubble with their own policy objectives. So regulators will cheerfully propose significantly tougher capital requirements for mortgage lending; and other regulators will equally cheerfully impose tougher selling requirements.”
Smee told delegates that while there are a number of obstacles in the mortgage market to overcome, better market conditions are attainable with effort, but to achieve them requires “joined-up thinking on the part of regulators, government, and industry alike.”
He added that the government also has the capacity to act as a “real catalyst for good” to help ease the housing crisis.
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“If the government wishes to be a designer, driver and implementer of a solution, then I fear that its chances of success will diminish and fail. If it defines its role as being a catalyst, a prodder and pusher of others, then it can maximise its impact. I have seen this in several markets; I do not think that housing is different.”
Smee also praised the Homes for Scotland initiative which supports the development of a mortgage indemnity scheme to help first-time buyers and others aspiring to purchase a new home. He said that the principle of indemnity schemes “seems to be right” and should be looked at elsewhere in the UK.