All eyes on the CML conference

Lending Strategy 01 November 2009 | By Christine Toner

This month the great and good of the lending industry will gather for the Council of Mortgage Lenders’ annual conference. While a lot is always expected from the event this year is special. 2009 has been one of the most interesting years in the history of finance, topped only perhaps by 2008 - the year that defined the credit crunch.

This year has seen massive changes and as the market continues to feel the reverberations of the economic crisis the focus has been on lenders. We all know the phrase ‘irresponsible lending’ has been bandied about as politicians and consumers alike point the finger.

But while lenders as a group have been targeted they have not all been treated the same. Indeed, non-bank lenders have been in the spotlight.
And with the publication of the Financial Services Authority’s Mortgage Market Review the subject of lender responsibility is even more relevant.

“The conference aims to help all operators in the mortgage market assess their business models against changing regulatory, political and economic conditions as well as outside expectations, and plan accordingly,” says a CML spokeswoman.

“The session featuring John Pain, managing director of the FSA’s supervision business unit, will give the industry its first chance to hear the rationale behind the proposed changes.

“Later breakout sessions will give everyone the opportunity to debate the regulator’s recommendations and help formulate the industry’s response.”

But what are lenders expecting?

Nici Audhlam-Gardiner, head of mortgages at Abbey and Alliance & Leicester, thinks regulation will be a hot topic.

“I expect the impact of the recent announcement by the FSA to be a central talking point,” she says. “The industry will be looking for clarification on the effect the review will have on the mortgage market, particularly with reference to income verification, fast-track mortgages and the effect of self-cert changes on customers and lenders.”

But she adds that while immediate industry concern will be focussed on the review there will be a broader interest in the outlook for the new year.

“The next 12 months will offer fresh challenges as we strive for market stability and recovery,” she says. “I expect a large part of the conference to be dedicated to what can be done by lenders to help drive this so it will be scrutinised carefully by consumers, intermediaries and the media to see if enough is being done to stimulate the economy.”

Steve Haggerty, group chief executive at Crown Mortgage Management, believes the event will be a subdued affair.

“I have no doubt everyone will be looking for signs of good cheer but fear it could be a rather muted affair with little to lift the soul in the lead-up to the festive season,” he says. “In particular, lenders will be worried about the effect of additional regulation and the repercussions for a fragile mortgage market.

“In the very week we were hoping - in vain - that the UK was coming out of recession the FSA’s review raised the spectre of onerous new rules placing additional responsibilities on lenders.”

Haggerty says the review could set the mortgage market back 20 years.

“The process will become slow and clunky again - there will be no way of turning round quick loan approvals for better quality customers and we could see something like mortgage rationing,” he says. “Then there’s the impact on the broker market to consider. If lenders are going to be on the hook for the performance of the business they originate they will want to control the process themselves and not rely on information supplied by third parties.

“This will make potential new entrants think twice before they take the plunge,” he adds. “Indeed, some firms who had planned to grow lending in the residential market may decide to switch to other sectors.”

Alan Cleary, managing director of Exact, says he hopes non-bank lenders get a fair hearing at the conference.

“I’d like to see non-banks represented by the CML as well as deposit-takers,” he says. “The FSA’s review is negative regarding non-banks and it would be good to see CML put forward a positive position.”

One thing’s for sure, this month all eyes will be on the CML and the industry will be hoping the Friday 13 conference date is not as bad an omen as it is thought to be.