Speaking at the CML Annual Conference this week, Clive Briault, managing director of retail markets at the FSA, said it was committed to considering in due course Professor Miles’ recommendations on the use by lenders of cross-subsidy within their mortgage books.
And Robin Gordon-Walker, spokesman at the FSA, added: “We encourage innovation and welcome lenders bringing out good competitive rates for new customers.
Our concerns are for those borrowers who are stuck on the lenders’ old rates and are subsidising the cheaper deals. Our goal is to have transparency so lenders’ pricing of products should be transparent.”
Gordon-Walker added that if any action were to be taken on lenders cross subsidising, the initial steps would not be taken until at least 2006.
Rob Clifford, managing director of Mortgageforce, said: “Any lender strategy to incentivise rates for new customers enhances the brokers position as it allows us to consider more lenders when sourcing deals for customers.
“There is a consumer view that existing customers shouldn’t subsidise new deals but that’s just the way our mortgage market works.”
Clifford added: “Obviously the FSA’s role is to protect consumers and if they are really at detriment then the FSA should act.
“But it is not the FSA’s job to change the pricing structure of products.”
Mike Fitzgerald, sales director at Brentchase Financial Services, agreed.
He said: “There’s thousands of competitive deals out there so borrowers don’t have to be stuck on a lender’s old rate, unless they are too lazy to shop around.
“The FSA should leave well alone and concentrate on more urgent issues such as KFIs and brokers that charge obscene fees. These affect consumers more.”
Gordon-Walker said the FSA is not an economic regulator and would not be regulating the price of products.
