Paul Smee, speaking at the trade body’s annual lunch in central London, said the regulator needed to intervene only when a serious breach occurs.
“The regulator should realise the scale of the change and the detail of the change; they should not be over-picky on technical rule breaches from day 1. The system will take a while to bed down in practice,” he said.
“Regulatory interventions need to distinguish between the deliberate foul and the technical breach. I hope that the FCA will think about the objectives which the rules were designed to meet when they decide what action needs to be taken; and not just the words, the many words, the many, many words with which they are expressed.”
Smee later discussed the prospect of a lending slowdown, stating the implementation of the new rules had the potential to cause issues.
“Will MMR be seen as a bump in the road; or a major market dislocation? Certainly the extra time which customers will need to take out a mortgage or vary an existing contract has the potential to cause backlog – not to mention customer irritation from those who wanted a slicker service. Customer reaction is a real unknown in this exercise.
“I tend to see MMR as a bump in the road and I just have to hope that I am neither myopic nor complacent. There is the capacity for things to go wrong. Two thoughts for reducing the risks.
“First thought, it would be helpful if the various parts of our industry did not start shooting at each other at the first sight of change, delay or minor glitch. It won’t help borrowers and it won’t help the sector’s reputation. Scare stories can be fun to read but run and run beyond their natural shelf-life.”
