Speaking at the third annual retail banking conference, which focused on the future of retail banking regulation, Clive Briault, managing director of retail markets at the FSA, said the regulator would be looking at bank and mortgage lender activity within the market.
Commenting on the recent move by a number of lenders to adapt higher income multiples, Briault said: “The move towards higher income multiples prompts us to ask whether lenders have appropriately stressed lending at such levels and whether these sales will be appropriately controlled to ensure that they meet the affordability and other responsible lending requirements that we impose.”
Briault added that as a result of rising unsecured debt among consumers, a small change in the economic structure, such as a further rise in the Bank of England Base Rate could have a major detrimental affect on a large number of consumers and their ability to meet their financial obligations. With this in mind, he urged banks to adopt new strategies to become more proactive, rather than reactive to the changing financial conditions.
He said: “Banks could make better use of their management information to proactively identify individuals who are starting to struggle – early intervention increases the range of options available.”
Sheridan Bradley, mortgage adviser at Lodemead, admitted banks and building societies could take a more proactive approach to identifying, and remedying the situation. She said: “I think lenders could do more. Levels of debt, and particularly bad debt, are increasing and I think banks need to start looking at what they give consumers earlier, rather than waiting until the borrowers are in financial difficulties and the banks slam the door in their face.”
