Speaking at the Building Societies Association’s annual conference, Jonathan Davidson, director of supervision – retail and authorisations at the FCA, said the regulator’s intervention in the market was not to create a universal approach to lending but to avoid a repeat of events that took place in the run up to the financial crisis.
He said: “I am aware that regulation (both conduct and prudential) has been blamed for a lack of innovation in the mortgage sector. We are also aware that some are concerned that we at the FCA want to see a market where everyone behaves in the same way.
“This is absolutely not the case. However, what we don’t want to see is a repeat of the past where much of the innovation in the mortgage market related to a relaxation of lending standards and credit risk often to target consumers who would not have been able to afford a mortgage otherwise.”
Davidson also noted that it was important for lenders to begin communicating with consumers about the prospect of a rate rise on the horizon. He explained that over a million borrowers had never experienced a rate rise, emphasising the need to ensure future affordability.
“We have seen good pre-arrears practices from a number of lenders. Now is the time to review your approach for dealing with customers who could experience payment difficulties, and now is the time to consider the different options you may be able to offer to them to ease the burden,” Davidson said.
This week, results from the FCA’s Call for Input on competition in the mortgage sector, showed some respondents were concerned about how commercial arrangements between lenders and brokers would impact consumers’ ability to make effective choices.
Davidson moved to allay any fears that the FCA had already made up its mind on the issues raised.
“I think it is also important to stress that we have no preconceived views on any of the issues raised – these are issues that you and other market members have raised with us as areas that are worthy of closer examination,” he said.