The Association of Mortgage Intermediaries (AMI) said those customers who were fast tracked “were those with good credit history who were deemed low risk by lenders”.
The trade body also warned the FSA about unintended cumulative consequences of their proposed reforms which include stricter affordability checks and income verification on all mortgages, effectively eliminating self-certification and fast-track mortgages from the market.
AMI is concerned that existing and future mortgage borrowers could be unnecessarily excluded from access to finance and face much higher costs.
Robert Sinclair, director of AMI, said: "The FSA has been provided with unprecedented levels of data and analysis by all parts of the mortgage industry and engaged in lengthy dialogue. We have fully supported the approach and the range of remedies previously discussed.
"Our main concern remains the timing of these changes and the further risk that we will make many families either property or mortgage prisoners. We are also concerned that we are seeing piece-meal introduction of the proposals with aspects such as transitional arrangements not yet ready for consultation. In not yet seeing the distribution elements we cannot judge if in making these proposals the FSA risks favouring particular channels.
"With the stricter gateway for new lenders and the increased capital requirements now applied to lenders we have already seen a more intrusive regulatory regime. The new individual authorisation process for those in the mortgage industry is also designed to deliver accountability. However, the new intensive and enhanced supervisory programmes must continue to provide positive results.
"We are concerned that FSA has not selected the most appropriate affordability remedies to provide measured results. It is proposing to apply virtually all the alternatives, with little consideration of the cumulative impact. The costs to firms will be significant and these will have to be passed on to consumers.
“There is some evidence that the self-certification process was misused. However, its demise will make life more difficult and expensive for consumers. Of greater concern is that despite the lack of any compelling evidence it appears fast-track mortgages may also be consigned to history. Consumers using the fast-track process were those with good credit history who were deemed low risk by lenders. We will continue to support our lender colleagues to retain this important feature of our mortgage market.
"We will continue our dialogue with FSA and the industry to ensure practical and sensible solutions are introduced.”
