Introducing the topic, Conservative MP Robert Syms told the Commons that the FSA could improve the mortgage market but added: “If it goes the way of some of the proposals…it could have a profound and bad effect not only on the economy but on the prospects for many of our constituents.”
Replying to Mr Syms the financial secretary to the Treasury, Mark Hoban, argued the FSA was committed to a smooth transitional period and would not implement any changes until the market was back on a stronger footing.
A statement from the CML said: “We welcome the continued involvement of government in the debate on what the mortgage market will look like post-MMR and note Mark Hoban’s assurance that the FSA ‘will not be implementing any rule changes until the market is back on a stronger footing’.
“We have advocated a measured approach to the consultation process from the beginning as the most important point is getting the new regulation right for all involved in the mortgage industry.”
During the debate Syms said he supported the FSA’s stated objectives of creating a flexible mortgage market that is sustainable for all participants and works better for consumers. But added that he felt it was crucial for the FSA to recognise that current problems were “primarily the result of liquidity and structural issues arising from global financial markets.”
He said: “They are not a result of a dysfunctional and widely irresponsible residential mortgage market. The FSA should be mindful that it is not focusing its attention on fixing the wrong problem.”
Syms was supported in the debate by the Labour MP for Barrow and Furness, John Woodcock, who argued that smaller lenders including building societies felt disproportionately penalised by the FSA’s proposals.
The Conservative MP for Nuneaton, Marcus Jones, said responsible lending should not exclude more generous loan-to-value ratios for first-time buyers to improve their ability to get a mortgage.
Hoban said it was important to address issues in the light of “the failed regulation of the mortgage market before the financial crisis.”
He added: “The FSA is…committed to ensuring a smooth transitional period, to minimise the impact of changes and keep the mortgage and housing market stable. It has made it clear that it will not implement any rule changes until the market is back on a stronger footing.”
