At first sight the CML is concerned that the FSA's proposals on how to extend the approved persons regime may be disproportionate for lenders - the costs will far exceed potential benefits. Within lenders there is typically a high level of consumer recourse to the institution over time, involving a range of functions, not just the original salesman or adviser.
The CML will now consider the proposals in more detail, and looks forward to working with lenders and the FSA to provide a constructive response to the proposals before the end of April deadline. The CML will also shortly be submitting an over-arching response to the mortgage market review discussion paper.
CML director general Michael Coogan observed: "We will need time to consider the FSA's proposals properly. But at first glance, the extension of the approved persons regime to both lenders and intermediaries appears heavy-handed, at least as far as lenders are concerned, and may be a sledgehammer to crack a nut. The number of sales advisers identified by the FSA also appears lower than we would expect, suggesting that the FSA may be underestimating the cost of implementing this proposal both for the regulator and firms.
"The arrears handling proposals are in line with industry expectations, and we broadly agree with them. Even so, it is important to remember that increasing the compliance burden on the industry also increases costs - the FSA's cost/benefit analysis appears to suggest only a modest increase in costs, but experience shows us that actual regulatory compliance costs always tend to be much higher in practice."
