The lending trade body said it would need to make sure all the pieces of the wider regulatory and policy jigsaw fit together in the MMR to avoid unintended conflict.
It said that one example for regulatory conflict may be the approach different authorities take to restrictions on loan to value ratios for mortgage lending.
The Bank of England’s financial policy committee will have an explicit responsibility for identifying, monitoring and acting to remove or reduce systemic risks.
The Bank will also oversee the work of the Prudential Regulation Authority with the sole objective of promoting the stability of the UK’s financial system.
The CML said that it wondered whether the FPC saw LTV limits as a suitable tool for bearing down on what it would see as a potentially worrying over-expansion of credit, especially in the future when more buoyant conditions return to the market.
If the FPC did implement LTV limits then the CML also wondered how it would sit alongside the government’s explicit policy objective of actively encouraging more 95% LTV business.
In response to the latest MMR consultation paper, the FSA said that it wanted “to put common sense at the heart of lending”.
The CML said it believed that the FSA’s revised proposals had the potential to deliver this.
The latest CML news & views publication said: “Borrowers should be able to get the mortgages they need, within a sensible regulatory framework. Consumers will be protected but the regulator proposes to give lenders more flexibility about how they achieve compliance.
“Obviously, there are areas where we feel there could be more improvement, and helping to deliver it will be our task in the three-month consultation exercise.
“Our response to the consultation will be exhaustive and, we are sure, exhausting. We want to hear the views of as many of our members as possible and put together a response that reflects opinion across the industry.”
