During a Treasury Select Committee (TSC) hearing this morning on the Mortgage Market Review, FSA chairman Lord Turner confirmed the Financial Policy Committee would make a policy statement soon.
However, he added there were arguments both for and against the proposals, which have been under discussion since September.
Conservative MP Mark Garnier asked whether the regulator had considered setting a standard calculation to make caps easier for consumers to use and understand.
Turner said the regulator had considered the option at length but decided the practice would be too restrictive, although he admitted the FPC could just step in and impose this anyway at a later date.
Martin Wheatley, the FSA’s new managing director for the conduct of business unit, said the extent of the FPC’s power was still being determined with Parliament yet to hand it the power to pass this directive.
“There will be a statement on this in the next few weeks,” confirmed Turner.
The FPC will be established within the Bank of England to monitor and respond to systemic risks proposed within the Financial Services Bill, which was published in January.
The government plans to hand the FPC macro-prudential tools “to help dampen down a credit boom or to help in a credit crunch…it will be able to alter the maximum loan-to-value ratios in mortgage lending in order to curb an unsustainable rise in house prices,” according to financial services secretary, Mark Hoban at the time.
The CML said in its latest News and Views, decisions made by the FPC could therefore have far reaching effects on lenders, consumers, mortgage and housing markets, and on the economy as a whole.
