Peter Williams, executive director of IMLA, attacked the regulator for attempting ‘market change by stealth’ by failing to assess how the mortgage market would be affected by the introduction of the Retail Distribution Review programme.
He expressed the association’s strong opposition to the review because of the potential for regulatory creep.
Williams explained: “Given the current conditions in the mortgage market and the considerable uncertainties that exist, we are convinced that wholesale replacement of the existing commission-based system could be disastrous for our industry.
While recognising that some reform may be appropriate, we do not accept that the present system is broken.
“We call on the financial services regulator to undertake an urgent short-term review of mortgage market implications of the Retail Distribution Review and to bring together mortgage trade bodies and industry experts to evaluate alternative ways forward.”
Meanwhile, according to research from Navigant Consulting, nearly two-thirds of lenders did not believe that the Retail Distribution Review should be expanded to cover the mortgage market.
Simon Kent, head of retail banking at Navigant Consulting, said: “Our research, which comprised in-depth interviews with senior executives from 15 of the UK’s largest mortgage lenders, demonstrates that, as things stand, lenders are not engaged in the proposals and do not believe that the Retail Distribution Review is going to benefit the mortgage market.
“The regulator needs to engage lenders to a much greater extent if it wants to make the proposed legislation attractive to the mortgage market. There’s clearly more work to be done if the FSA is to really sell the Retail Distribution Review to mortgage lenders.”
Samantha Bennett, spokesperson for the FSA, said the Retail Distribution Review would not automatically be transferred to the mortgage market.
“The review will not result in automatic read-across to the mortgage market. We remain open minded to feedback that suggests improvements in the investment retail market should be applied more widely.”
Try your luck in our latest quiz
get the daily news delivered to your inbox
find the latest industry jobs
