Stephen Smith, director of housing at Legal & General, said: "The Mortgage Market Review has given the industry much to think about over the next three months and the eventual changes to be brought in could alter the way both lenders and intermediaries do business quite radically. In particular, the division of responsibilities between lenders and intermediaries for assessing the suitability and affordability of a mortgage for a customer will need careful consideration and dialogue between both parties.
“Aside from this key point, there is much to welcome in the Review. The proposals to extend the Approved Persons regime to enable individual brokers to be registered and tracked should ensure that brokers who are not up to scratch can no longer fly below the radar, and we are also pleased that there will not be a wholesale change to the method by which intermediaries are remunerated.
“We are also pleased to note that the regulator says it will try to tackle consumer detriment from more risky products by intervening at lender firm level to stop unduly risky business models or strategies from being implemented.
“However, there are also several areas where the FSA has reserved judgement which are important to intermediaries, such as their views as to whether intermediary fees and product fees should be able to be added to the loan and whether there should be restrictions on how much equity a borrower should be allowed to withdraw from a property.
“In addition, whilst not moving to product regulation on the individual elements of loan to value or loan to income, the FSA has said it may consider prohibiting loans that have multiple high risk characteristics. In this regard, this Review is "work in progress" and we look forward to further well thought out and analysed proposals from the FSA in due course."
