With the FSA expected to publish its discussion paper later this month, the trade body said that proposals for regulatory reform must focus on areas where evidence of consumer detriment have been clearly identified.
The CML’s submission stressed that some previous concerns about the mortgage market have already been addressed by the way in which firms have responded to changed market conditions. The body argued that there is no need for “urgent intervention” by the FSA to complete its review, change the mortgage rules or implement broader regulatory reform.
The CML added that the European Commission’s ongoing review of responsible lending and borrowing was another reason for caution. The body said it was crucial for consumers, as well as firms, that proposals in the UK and Europe werenot conflicting.
Michael Coogan, director general of the CML, said the FSA faced a number of challenges and potential pitfalls in progressing its review too quickly.
“Perhaps the biggest of all is to resist external pressure to implement measures at a time when the mortgage market has self-corrected many of the past problems, but is still not functioning effectively.”
Coogan stressed that the existing mortgage rules had broadly been working well since they were introduced in 2004, enhancing protection while promoting competition and choice for consumers.
He explained: “The current problems stem not from a failure of the mortgage rulebook, or from widespread credit problems in a recession, but essentially from past approaches to supervision of the rules and an over-supply of money to lend out. Now the pendulum has swung and the problem is the lack of available mortgage finance. Regulatory intervention on mortgages is unlikely to reverse this trend and may accentuate the problem.”
