Is further regulation intended to protect the vulnerable or offer everyone the chance to buy a house? asked the Council of Mortgage Lenders (CML).
“They [the goverment] can do both by allowing free access to the market to responsible borrowers, but establishing an effective safety net for the few who have difficulties due to changes in their lives,”
CML director general Michael Coogan said today: “The FSA, like the industry, needs to have a clear steer from the Coalition government about what type of regulatory structure is needed to support housing policy and deliver systemic stability in the mortgage market in the 21st Century.
“When we know what the government wants the regulator to achieve, we and FSA officials will be in a better position to deliver the sustainable market for all participants which is flexible for consumers. These two outcomes reflect a shared vision by the FSA and lending industry. The CP proposals have blurred that vision to a point where neither outcome will be delivered by CP 10/16 as drafted,” he said.
Coogan attempted to rouse the industry, saying if you agree, write to the FSA, your local MP and relevant Ministers.
The trade body said a full impact analysis was missing from the first set of responsible lending proposals and urged the Financial Services Authority (FSA) to launch a second consultation to get it right.
Coogan said a new consultation would give respondents the chance to respond far more constructively and “forge a path with the regulator to achieve the right regulatory outcomes.”
The FSA responded immediately, saying the MMR is intended to replace
risky lending and unaffordable borrowing with common sense standards.
The regulator said low interest rates continue to shield almost half of UK households with little or no money left over after their monthly mortgage and household bills are paid.
“There are currently 350,000 borrowers in arrears and 54,000 homes were repossessed last year. Even a modest rise in interest rates could lead to a significant increase in the number of families suffering financial distress,” it said.
This is why it is imperative that we ensure lenders act responsibly and do not return to irresponsible practices, in order to protect consumers from taking on mortgages they cannot afford and potentially losing their homes, said the FSA.
The regulator acknowledged the work many firms have already done to tighten up procedures in the downturn. This is why the MMR proposals are accepted by many firms as just a return to ‘sensible underwriting’ and common sense, it said.
“As we have said before, we continue to welcome and review all feedback we receive and we have already indicated we will not rush into change without fully assessing the impact of our proposals on the mortgage market,” said the FSA.
