Matthew Wyles, group distribution director at Nationwide, said there was a danger vague and wide ranging regulation would cause lenders to be ultra-cautious and “build a no man’s land” of borrowers they wouldn’t lend to.
He said: “Let’s get some rules that we all understand because there is a danger that we lenders will end up building a firewall, a no man’s land between the absolute limit where that regulation may technically permit us and where we dare to go. That is always a consequence of a lack of clarity.”
Wyles said the single most important thing the FSA could deliver in the fourth MMR paper was “real clarity about what we are and aren’t expected to do”.
He added: “The great fear is that the rules will come out in a fairly broad, principles-led way. We all know what principles-led regulation is.
“It’s the ability to rewrite the rules retrospectively and tell us that with the benefit of hindsight we weren’t consistent with the principles we thought we understood.”
He admitted the FSA was beginning to listen to the industry but was clear that MMR must take account of all the feedback which was “still ongoing”.
“After a bad start I think the FSA has started to listen now,” he added. “That said I think they’re still very dogmatic in many ways about the way they think about the subject.”
David Finlay, intermediary channel director at Barclays, said he agreed that clarity from the FSA was critical and added: “Please talk to the European regulators as well so that we don’t have to go through all of this again.”
