The BSA argues strongly for the FSA to focus its attention exclusively on those areas where there is strong evidence of failure and for it to consider the cumulative effect of regulatory changes on the whole of the market. Reactionary regulatory intervention will deliver little or no benefit to consumers.
Paul Broadhead, head of mortgage policy at the BSA, said: “Though showing some small signs of recovery, the UK mortgage market remains fragile. It is crucial that the Government and regulators take stock of the current suite of regulatory interventions and consider the aggregate impact of these reforms before bringing in more new requirements.
“In our response to the mortgage market review proposals we call for flexibility when assessing a borrower’s income and affordability. If the FSA chooses to take a very prescriptive approach, this could mean many existing borrowers, who are already successfully repaying their mortgages, will find it difficult to remortgage in the future (or in some instances get a new mortgage at all) while many future borrowers will be deprived of the opportunity to take out a mortgage.
“While we support the introduction of an approved persons regime for advisers, the impact on lenders could be disproportionate. As the proposals currently stand, we fear that the regime will extend beyond those staff involved in the advice process. If implemented on this basis, it would have significant cost implications for little benefit.
“As the mortgage market rebuilds for the future, all lenders should be able to compete under the same rules. It is vital that, in order to encourage competition and consumer choice, the FSA ensure there are consistent and equitable prudential rules that do not discriminate against building societies.”
