In its response to the FSA's consultation on mortgage distribution and disclosure (CP10/28) the CML said the absence of final decisions on the responsible lending and affordability made it hard to know whether the MMR will deliver sustainability for firms and flexibility for consumers.
The lender trade body said the MMR proposals in this consultation and the earlier one on responsible lending (CP10/16) go too far and the rules do not accurately reflect policy in a number of important ways.
The CML said the single standard proposed by the FSA to cover both advised and non-advised mortgage sales will create as much confusion as it seeks to resolve.
“Consumers will become more likely to believe that they have received "advice" when they have not and to become more passive in their role in choosing a mortgage as a result of the narrowing of the differences in the sales process,” it said. “In effect the CML believes that the rules as drafted will introduce an advice-only sales process in all but name, which gold plates the approach expected in Europe.”
It said the proposals are likely to increase firms’ costs and reduce consumer choice about how they buy their mortgage.
“Performance data shows that non-advised and execution-only sales have produced perfectly good outcomes for the vast majority of borrowers who have chosen them, so the proposals appear disproportionate and remove rather than enhance flexibility for consumers.”
CML director general, Michael Coogan, said: "Responsible lending and distribution are inextricably linked so dealing with possible rule changes in separate consultations helps neither the FSA nor the industry take a coherent overview of the impacts of the mortgage market review.
“From what we have seen to date we believe the interventions proposed are disproportionate and not backed by the evidence. We stand ready to work with the FSA on a set of rules which should deliver their policy outcomes and would deliver real benefits to borrowers in the future.”
