Housing policy remains in limbo

Lending Strategy June 2010

Well, I didn’t see that coming - Conservative leader David Cameron and Liberal Democrat boss Nick Clegg working together like good public schoolboys in harmony, with their hands on the nation’s tiller.

And am I alone in wanting to scream if I hear the phrase ’stable government in the national interest’ one more time? It really is being done to death but at least it amuses me when it is delivered through obviously gritted teeth.

And now we have the coalition’s programme for government. We may have the lion lying down with the lamb but I have yet to spot any references in the document to swords being beaten into ploughshares despite the somewhat pious tone that has been adopted by the unlikely bedfellows.

On the other hand, what the document does contain is some rather interesting pointers to the future of the fin- ancial services sector.

The banking sector gets top billing, with promises to curb bonuses, increase the flow of credit and introduce a banking levy. Mention is made of promoting mutuals and increasing competition in the banking industry.

But I have to tell you I was somewhat taken aback when I read about the notion of introducing a free national financial advice service. I suppose it’s one way of creating competition but funding this via a so-called social responsibility levy on the financial services sector seems a step too far.

I mean, what other industry has to fund its own competitors?

I suspect the result, in fact, will be a big role for intermediaries in unpicking the dodgy advice given by some NHS Direct-style call centre.

Funding competitors
It also appears that the Bank of England is poised to take responsibility for macroprudential regulation and the oversight of microprudential regulation. But it appears that the break-up of big banks is to be kicked into the long grass that is otherwise known as an independent commission.

The first bit of the document I looked for - and the part that is painfully conspicuous by its absence - is the Tory commitment re garding getting shot of the Financial Services Authority

Unsecured lending seems to be in the coalition’s sights, with plans to define and ban excessive interest rates on store cards.
And so-called unfair bank charges, along with what are described as unfair transaction charges, are destined to become mere footnotes in history.

We are also told to expect legislation on what the document terms unreasonable charging orders, and moves to ensure courts are given the power to insist that repossession is always the last resort.

Meanwhile, orders for sale are to be outlawed for debts less than £25,000.

Of course, all this has the potential to translate into a back door levy on banks and other lenders if they are prevented from enforcing debts to which they are otherwise legally entitled.

The areas in which the policy document is particularly disappointing are housing and housing finance.

Potential changes to Stamp Duty are merely to be the subject of yet another review.

Otherwise, there are vague promises to explore the idea of bringing empty homes into use and the promotion of shared ownership schemes. The most amusing suggestion, not least because it sounds so twee, is the Home on the Farm (our rulers’ capital letters, not mine) scheme to encourage farmers to convert farm buildings into affordable homes. I’m not sure this policy will get a ringing endorsement in the Tory shires.

Whichever way you look at it there will be wholesale changes that will affect our industry.

But of course, the first bit of the document I looked for - and the part that is painfully conspicuous by its absence - is the Tory manifesto commitment regarding getting shot of the Financial Services Authority. It seems that this distinguished body is to be with us for some time yet.
Philip Tebbatt is principal of niche financial services law company Slater-Rhodes and can be contacted at philip.tebbatt@slater-rhodes.com