Previously, the FSA had looked to publish its findings this summer.
However, speaking at the FSA’s annual public meeting today, chairman Lord Adair Turner said that there was still much analysis to be done over how far intervention should go to protect consumers, hence the delay.
Hector Sants, chief executive of the FSA, added that rules will be published in 2012.
Turner said: “The more that a regulator seeks to intervene in defence of consumer interest, the more that the regulator is then making crucial trade-off choices on behalf of society, and such trade-offs are never purely technical, but judgemental and political with a small ‘p’.
“Such trade-offs are at the forefront of our work on the MMR, which is designed to address the tail of poor lending, where consumers were sold mortgages with a likelihood of default so high that the lending might reasonably be considered irresponsible.
“But the crucial social choice is: how high is too high?”
He said the question of how far consumer protection should go, potentially at the expense of the majority of customers, was one that deserved wide-ranging debate in order to come to a consensus.
Turner said: “It is not a question which a regulator can resolve on the basis of technical analysis alone.
“The analysis required to enable an informed debate on this issue needs to be of the highest quality and clearly presented.
“This means that we will not be publishing our proposal before early autumn but I trust that when it is forthcoming, it generates the engagement that this important question deserves.”
Sants added: “We are conscious that achieving the right policy package will be a difficult judgement. We will thus ensure our proposed package of measures is backed by comprehensive analysis.
“We will publish this material and our proposed package of measures in the autumn. Our final rules will not be published until 2012.”
Robert Sinclair, AMI director said: “This further delay to consulting on the MMR, is a double edged sword. Whilst it will allow us to have more certainty as to the direction of travel in Europe, business decisions continue to be blighted by a lack of regulatory certainty.
“We had heard a softening in tone from the FSA in recent months, but until we have a formal publication firms have no clear guidance on what the regulator might expect. Whilst a robust cost benefit analysis is important, lenders and brokers are keen to move the market forward in a safe and sustainable way.
This delay must be used to ensure all issues are resolved and that the MMR provides a level playing-field between the UK and other member states and between UK lenders and intermediaries, he said.
However, the CML welcomed the delay, saying the FSA is right to take its time to analyse the issues and allow for an informed debate. It said this will produce a more comprehensive paper that minimises potential conflicts with the proposed European directive on responsible lending and borrowing.
Michael Coogan, director general of the CML, said: “We are pleased that the FSA wants to take time to get it right. The regulator has already indicated that it will be cautious about implementing change while the mortgage market recovers. The current muted state of the market presents no regulatory threat, so there is no need to rush.
“We now look forward to continuing to work with the FSA and its successors, the Financial Conduct Authority and Prudential Regulation Authority, to implement the right sort of regulatory reform for the mortgage market.”
