Since it was first launched in May 2009, the Mortgage Market Review (MMR) has been viewed by many in the industry as a case of calling in the architects to design and build some sparkling new high security gates for the stables from which the horse has not only bolted, but has already been taken to the knackers yard and turned into dog meat.
The critics ask if we can actually now point to any market practice, which the MMR saw as a concern, which has not already been driven out of the market by lender or broker changes in behaviour?
• Self certification? – gone.
• Interest-only mortgages? – severely constrained.
• Fast track? – severely constrained
• Under qualified brokers? – left the industry in their thousands.
• New entrant lenders bagging business with high procuration fees and lax credit standards – long gone.
Now, the regulatory authorities can be forgiven for saying that most of these market practices must never be allowed to happen again. But is it unreasonable to ask if a whole new rulebook is required to do this?
Or could it be handled through more “upstream intervention” – through use of the “intensive and intrusive” supervision which has been used by the FSA with lenders to clear effect over the last couple of years.
Those authorities have done a pretty good job with their existing powers in stopping any over-enthusiastic new lenders launching in the UK market since the crash.
Where we seem to be right now is that, having spent over three years debating, developing and revising ideas, it could feel embarrassing for all of us not to produce a weighty tome of new rules.
But another question being asked in the industry is, “are questionable practices happening today in the core mortgage market, or in the Wild West of the new and unregulated lending sectors?”
It might be a very radical approach to take, particularly given the amount of time and effort that has gone into the MMR so far, but perhaps we could take the stance that “less is more”.
Perhaps we could have some modest editing of the existing MCOB rules? Perhaps to clarify what a “non-advised” really means, or to re-emphasise the lender’s ultimate responsibility for the decision to lend.
Then the regulators could spend some time on the new emerging risks from the new emerging markets and get ahead of the game in these sectors.
It could save the whole mortgage industry, and therefore consumers, a lot of money, time and effort if the scale of the stable door re-construction was massively reduced.
