Do you believe that the FSA’s light touch regulatory approach led to market problems? Should the FSA have been harsher in the past?

Name: Katie Tucker, Mortgageforce

The FSA’s light-touch regulation cannot be solely held responsible for the market problems per se, but the direction of its focus certainly marred its capabilities.

In 2007, lenders were granting loans without adequate security. High percentage lending just cannot be used as a long-term strategy because high house prices cannot be sustained. The FSA’s resolution not to interfere with market forces added up, ultimately, to irresponsible lending.

The regulatory body should have been more aware of the type of lending which was occurring and should have been keener (or perhaps more empowered) to intervene.

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With a broader remit, the FSA could also have had more power over lender dependence on the securitisation market or on any single source. Instead, the successes of that time were advice based: specifically document standardisation.

Key Fact Illustrations have improved transparency for consumers. Product ‘suitability’ is significantly superior to ‘appropriateness’, particularly in its focus on providing the most competitive deal.

The Initial Document Disclosure may not have stimulated competition as intended but it has added clarity to terms and conditions. It is one of the best sales tools we have ever had, and it would be a mistake to abolish it.

Evidently, focus on the advice end was to the detriment of the attention given to the security and ability to repay models, and the wholesale funding. A wider remit and a philosophy of seeing the bigger picture are the inevitable lessons from this crash.

Name: Fahim Antoniades, Mortgage Centre IFA

Who is to blame for the state of the mortgage market? In this case, the natural human instinct is to always defend your own personal position.

Lenders are likely to defend their position while mortgage brokers are naturally going to defend theirs. Both are laying the blame at the feet of each other.

The fact remains that both sides of the fence are commercial entities, whose main concern is generating profit. In an open and free market – whether you are a broker or a lender – profits are earned by having a competitive edge. Such an environment can result in a run-away situation where the parameters of the acceptable are ever pushed further.

Admittedly, that there have been brokers who have fallen on the foul side of the regulator, but is a 90% self-cert loan with a 5% draw-down and Stamp Duty added not a bridge too far? I certainly thought so.

Both sides of the fence have pushed each other on and should share the blame.

With the benefit of hindsight, it is all very clear now but I do not think anyone would argue that we could have foreseen the extent of the looming problem. Had the FSA taken a hard-line approach, then it would have been accused of attempting to quash a free market.

The FSA has the unenviable task of striking the right balance between curbing enthusiasm and allowing the market the freedom to be creative.

In my view, the best way it can achieve this is to sit on the fence and show an even hand when dealing with both brokers and lenders.

Name: Melanie Bien, Savills

Getting the balance right when it comes to regulation is tricky. If regulation is too heavy-handed, you risk stifling innovation and ambition. Too much of a light touch and you could even create opportunities for those looking to advance themselves by illegal means.

In the post-credit crunch world, where everyone is desperate to blame someone else for the problems that emerged, the FSA is one of the easiest targets. Should we assume that banks and brokers would misbehave if given the opportunity to do so?

What is apparent is that mistakes have been made but also that many of these have also been rectified.

Too heavy-handed an approach too early on would simply have alienated those who the FSA was there to regulate. It may have stifled an industry, which, on the whole, worked well.

However the light-touch regulation went too far the other way, and it is now apparent that in some areas it was ineffectual.

It is important that the pendulum does not now swing too far the other way. There is a temptation to be heavy-handed but this cannot be allowed to happen just as the industry is starting to recover.

The FSA must not over-react and use the Mortgage Market Review as a stick with which to beat the industry. Any gentle shoots of recovery will be stamped out if that happens.

Instead, as an industry we must learn from our mistakes and hope that the FSA cracks down where necessary but leaves room for innovation and sense as well.