Turner revealed the delay at the FSA’s annual public meeting stating the reforms needed wide ranging debate.
Turner said: “The more that a regulator seeks to intervene in defence of consumer interest, the more that the regulator is then making crucial trade-off choices on behalf of society, and such trade-offs are never purely technical, but judgemental and political with a small ‘p’.
“Such trade-offs are at the forefront of our work on the MMR, which is designed to address the tail of poor lending, where consumers were sold mortgages with a likelihood of default so high that the lending might reasonably be considered irresponsible.
“But the crucial social choice is: how high is too high? If you knew in advance that mortgage lending to a customer group with specific characteristics had a 15% chance of resulting in arrears and repossessions, is that too high? – when the implication of considering it ‘too high’ is that we will protect the 15% from the trauma of repossession, but at the expense of restricting the freedom of 85% of that customer group to make a stretching but still ultimately affordable commitment.
“That is a question which deserves wide-ranging debate, as best possible to forge a social consensus: it is not a question which a regulator can resolve on the basis of technical analysis alone.
“The analysis required to enable an informed debate on this issue needs to be of the highest quality and clearly presented. This means that we will not be publishing our proposal before early autumn but I trust that when it is forthcoming, it generates the engagement that this important question deserves.”
The Council of Mortgage Lenders welcomed the announcement that the MMR publication would be delayed until early Autumn. The CML said: “It is no surprise that such a large and complex piece of work, which needs to contain a full cost-benefit and impact analysis of the FSA’s proposals, may take longer to complete than originally expected.
The CML agrees with the FSA that the analysis required to allow an informed debate on the issues needs to be of the highest quality and clearly presented. They hoped that the additional time will not only allow the FSA to produce a comprehensive paper, but one that may be better integrated with the proposed European directive on responsible lending and borrowing.
Michael Coogan, director general of the CML, added: “We are pleased that the FSA wants to take time to get it right. The regulator has already indicated that it will be cautious about implementing change while the mortgage market recovers. The current muted state of the market presents no regulatory threat, so there is no need to rush.
“We now look forward to continuing to work with the FSA, and its successors the Financial Conduct Authority and Prudential Regulation Authority, to implement the right sort of regulatory reform for the mortgage market."
Michael Fitzgerald, director at Brentchase Financial Services, said: “When Grant Shapps stood up in parliament and said, if it hadn't been for interest-only he wouldn't have got his first mortgage, I think that started the corrosion with MMR and putting things back.
“When it was in its first original draft it was horrendous, you wouldn't have got any growth in mortgages and they would probably have shut down, lots of brokers and lenders as well. So I'm really not surprised it's being put back for deeper analysis and for even more people to have their say. Eventually something will come in and it will be interesting to see what they're going to do.
“The previous deadline was a bit of a shock to brokers and lenders and even the consumers that might have read about it. I think they've put it back so all parties concerned can get heard, especially when you get the housing minister bringing up one of the main tenants of the MMR then I think they've done very well to admit that perhaps they do need a bit more time.
“Whether they need the extra time or not, I think it's a good thing they've put things back a bit so that will allow all for proper debate to take effect. It will be interesting when it finally comes out what's going to happen and we'll have to wait and see for it. I think the FSA has probably taken the right approach with this in this instance.”
