The Panel is "keen to see an end to previous irresponsible lending practices". It believes, however, that the FSA needs to do more work before introducing new rules with potentially far-reaching consequences.
In particular, the Panel is advising the FSA to undertake a full cost benefit analysis to ensure the wider social and economic implications of its affordability proposals are fully understood. It also wants the FSA to look more closely at the transitional arrangements for existing borrowers as well as the proposed regulatory arrangements to deal with future housing market bubbles.
Commenting, Adam Phillips Consumer Panel Chair said: “It is vital that the FSA now undertakes a thorough economic analysis on the likely impact of the MMR proposals.
“We need to understand the human and social implications of these changes as they could have major consequences not just for existing and future borrowers, but for the UK housing market as a whole. The FSA does have time on its side, given the lack of any imminent recovery in the housing market.
“We are also concerned about how the MMR proposals will interact with other initiatives which may be taken to regulate emerging property bubbles by controlling lending by banks and building societies. It is essential that proper consideration is given to the respective remits of the new regulatory authorities.”
