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FSA admits the mortgage market failed for some borrowers

by: Mortgage Solutions
  • 13/11/2009
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The FSA said it wants to move towards a flexible, sustainable market which works for all consumers after admitting that the industry failed a significant minority of people.

Jon Pain, managing director of supervision at the FSA, speaking at the Council of Mortgage Lenders (CML) annual conference, emphasised the FSA’s new bolder approach to regulation and its commitment to protect consumers and reduce financial crime.

Pain emphasised that the FSA is not seeking to block access to the market through income verification measures by the proposal to ban self-certification mortgages.

He said “Rather, it will yield various benefits, including a reduction in the number of unaffordable and unsuitable mortgage transactions, a decrease in arrears and repossession rates, improved transparency; a reduction in mortgage fraud and an improved confidence in the market”.

He added that the regulator will work closely with firms to identify acceptable verification measures and best practice for affordability assessments.

On the subject of arrears, Pain highlighted that this issue needed urgent attention and that it was committed to a tougher approach in this area, pointing out that its enforcement team is still investigating five more firms for poor treatment of borrowers in arrears. He added that the FSA will consult in January 2010 over tightening its conduct of business rules on arrears handling.

Pain concluded: “Mortgages need to be based on a proper assessment of affordability if we are to have a sustainable market. Everyone who takes out a mortgage should be able to repay it – they should have some evidence that they can repay it and lenders should take note of that evidence. We want lenders to get back to the basics of responsible lending.”

 

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