Leader: Beware of the watchdog
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The news last week that the Financial Services Authority is to take a more proactive approach to protecting consumers raised more than a few eyebrows.
As one contributor to Mortgage Strategy’s online forums asks - why has it taken five and a half years of mortgage regulation for the FSA to start thinking about this?
The truth is that the sector has passed through a period of relatively laissez-faire and is bracing itself for a tightening of the vice with the Mortgage Market Review.
In 2004 Mortgage Day gave us box-ticking regulation that was more concerned with the appearance of a well functioning market than ensuring it was structurally sound.
A year before M-Day the BBC provided the FSA with two in-depth investigations into problems surrounding the sale of self-cert products, but the regulator did little to address the problems once mortgages came within its remit.
As outgoing chief executive officer Hector Sants says, from now on the FSA is to be a proactive regulator. He argues that the new-look watchdog will take its own view and not rely on firms behaving responsibly or assume the market is always right.
Of course, it could go too far the other way. Having finally jumped on the anti-self-cert bandwagon there is the strong possibility that it could now throw the baby out with bath water in its attitude to fast-track. The cost to the industry and consumers would be huge if fast-track was to be axed.
The FSA should not take the industry’s word that all products are foolproof but its decisions should be based on evidence rather than an overzealous desire to belatedly get a grip on the market.
