The lender trade body said the proposed changes to mortgage market regulation outlined in CP10/16 of the Mortgage Market Review will impact on consumers and they should have the opportunity to be heard in the consultation period.
The paper on responsible lending calls for fast-track, self-certification and potentially interest-only mortgages to be banned, which the CML believes will create a market with fewer participants, less competition and less choice at a higher price for consumers.
A CML spokeswoman said: “We understand that regulatory change is inevitable but we are concerned that not enough thought has been put into its likely market impact.”
At the British Bankers’ Association annual conference in July, FSA chairman, Lord Adair Turner acknowledged the need for debate around the proposed changes.
He said: “This [proposed regulation] is a major shift in philosophy and I believe a necessary one. But also one which carries risks – the risk that we swing to the other extreme, restricting consumer choice where we do not need to, and imposing regulatory costs which are disproportionate to what we can realistically achieve.
“We need to strike a balance, and to get that balance right, we need to debate it openly and explicitly: with the industry, with the press, with the politicians, with society.”
The CML spokeswoman added: “We agree with Lord Turner that a wide ranging public debate about what sort of a mortgage market consumers want will ensure the public understands the effect these changes are likely to have on their ability to become or continue as home owners.”
Kevin Friend, strategic partnerships director at consumer website mortgages.co.uk said debate was critical but added that he feared the FSA would not listen to people’s views.
He said: “The question is who in the public domain would fully understand and be able to offer a valued opinion when consulted? If the FSA continues not to take notice of trade bodies including the Association of Mortgage Intermediaries, the CML, the Building Societies Association and the Intermediary Mortgage Lenders Association, are they really going to listen to others?”
He added that the industry seemed generally to be of the view that some of the proposals were “ill-conceived” and will have a “negative” impact on an already depressed market.
The FSA was unavailable to comment.
