The great unpopularity contest
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Ithink I have just read the last word in unpopularity contests - the cage fight that is the Treasury Select Committee report entitled Mortgage Arrears And Access To Mortgage Finance.
This basically represents a tussle between politicians and lenders as to which of those unloved sectors will emerge as the least unpopular when the dust settles after the credit crunch. In the public imagination it's the equivalent of having to choose between Hitler and Osama Bin Laden.
It's easy to tell that the politicians were salivating at the prospect of being able to take evidence from the likes of housing charity Shelter, Which? and Citizens Advice Bureau, all of which were bound to provide them with all the evidence they needed to give the nasty lenders a kicking. And not a duck house to be seen.
I usually like to steer readers of this column towards publications they may consider important in the context of their businesses but I'm not going to recommend this one, particularly if you suffer with high blood pressure. It appears to have been written with the sole intention of grabbing headlines in the Daily Mail.
In the report the committee comes to a number of conclusions. In particular, it expresses concern about excessive mortgage arrears fees. You might recall that this is one of the conclusions that resulted in members of the committee appearing all over the media in a short burst of activity.
What did not receive quite so much publicity is the fact that the committee had to concede it had not "received conclusive evidence that the mortgage arrears charges levied by lenders are excessive and go beyond recouping additional administrative costs". This seems to me to be an important qualification but it does not appear in the report's summary.
But the report does call on the Financial Services Authority to "take a much more robust stance to tackling and eliminating unfair arrears charges" - the same charges in respect of which there is no conclusive evidence.
Predictably, committee members "share the concerns" of Shelter, Which? and CAB that the FSA's principles-based regime has allowed too much flexibility and accordingly too wide a di- vergence between firms' approaches.
Members go on to conclude that this means consumers are being treated in an inconsistent manner. Again, I see no evidence in the report to support this conclusion.
As the report was focussed on mortgage finance one has to wonder how many mortgages most individuals have against which they can benchmark lenders' varying approaches.
Of course, a first charge holder and a second charge holder will have differing approaches. And their models will not be the same as credit card companies or personal loan providers. I can't see any justification for the committee's concern in this regard.
Another conclusion that may be a harbinger of things to come is the recommendation that second charge lending should be brought into the FSA's remit. I'm not going to knock that - about time too, I say. The FSA has yet to publish its response to the report but giving the regulator a dressing down also appears to have been seen as another easy win by the politicians.
The FSA is chided for supposedly taking a leisurely approach to its review of mortgage arrears. I don't often stand up for the FSA but isn't the best time for a review when the dust has settled and meaningful lessons can be learnt?
While the committee stops short of supporting the view that there's too cosy a relationship between the FSA and the industry, members enigmatically point out that they can see why suspicion lingers. I'm sure that firms across the land feel they have a cosy relationship with the FSA.
Do not read this report, read Jackie Collins instead - her books bear more resemblance to reality.
Philip Tebbatt is principal of niche financial services law firm Slater Rhodes and can be contacted at philip.tebbatt@slater-rhodes.com
Source:
Lending Strategy
