Robert Sinclair, director of AMI, said: "In supporting the principles and aims of MMR, we have been vigorous in arguing that it should not stifle innovation, choice and the ability to get on the housing ladder.
“We are therefore fully supportive of the proposals to make advice the default position for all mortgage transactions, with an opt out for those confident they can execute it themselves.
“This division provides clarity and support for consumers.”
AMI has argued throughout that many of the issues that resulted in the MMR could have been dealt with by proper application of the MCOB rules, via effective Financial Services Authority supervision.
And Sinclair added: “This remains the case. It is important that the risks identified are now also clearly set out in FSA’s final Policy Statement, under-pinned by an impact assessment of the solutions proposed.
“Currently, there is a fear that this complex set of inter-related proposals will see market participants over-react.
“We would therefore like the new FCA to monitor carefully all implementation to avoid the risk of unintended interpretations and consequences.
“In particular, we must ensure we do not destroy the market for the self-employed, those on interest-only loans or the credit impaired.”
Sinclair said there is also a real danger that current proposals will result in mortgages being available only to PAYE tax-paying UK citizens with existing equity, as there are risks for lenders in opening up loans to other groups who will find it harder to demonstrate affordability.
He added: “We are particularly concerned about the interest-only and transitional arrangements proposals.
“Additional borrowing should be allowed within controlled amounts and monthly repayment costs should also be allowed to increase, where this is in the customer’s best interest.”
He also expressed regret that the FSA had failed to deliver individual registration.
He said: “The expansion of the approved persons regime to the mortgage industry was a core part of the MMR proposals.
“We are extremely disappointed that the application of individual registration has been delayed indefinitely.
“We call upon FSA to reconsider the decision to delay the implementation of individual registration. The benefits are too important to be pushed back.”
AMI also said it believed that with the move to make advice the norm, the introduction of the customer best interest provisions and the enhanced affordability provisions, there is limited need for the inclusion of high risk consumer categories as suggested.
AMI’s full response will be published on the AMI web-site.
