MMR: Trade bodies welcome amended proposals

19 December 2011 | By Tessa Norman

The Association of Mortgage Intermediaries says it is glad the Financial Services Authority has taken on board a number of its recommendations.

Robert Sinclair, director of AMI, says he is particularly pleased with the requirement for advice for all interactive sales, as this will provide significant benefits for consumers.

He says: “Buying a house is a substantial financial undertaking, and we have long argued that providing consumers with expert advice is a process that cannot be left to chance.

“The MMR’s proposals will ensure many more consumers are given the support and guidance they need to make better and more informed decisions.”

Sinclair says he is also pleased the FSA has recognised the importance of creating a level playing field for lenders and intermediaries in terms of qualifications and determining product suitability.

He adds: “The only area we consider needs further work is on the transitional arrangements, where the work to assist mortgage and property prisoners might benefit from further development.”

Meanwhile the Council of Mortgages Lenders describes the latest proposals as far more workable and appropriate than those contained in previous consultation papers.

It says it had previously been extremely concerned that the earlier proposals would have had a detrimental effect on consumers and lenders, but that the FSA has listened to those concerns.

Paul Smee, director-general of the CML, says: “Lending needs to be responsible and done in a way which protects consumers. Rules need to be practical and avoid unintended consequences.

“Whilst there is much detail to be pored over, the FSA’s new proposals seem to strike broadly the right balance.”

Paul Broadhead, head of mortgage policy at the Building Societies Association, adds that the new proposals appear to represent a welcome shift in policy from the FSA.

He says: “No-one is looking for a regime that permits lax lending practices, but the original proposals were in danger of locking credit-worthy borrowers out of the market or imprisoning those with immaculate payment records, but non-standard profiles, in their current homes and loans.  

“This seems to have been avoided which is good news for the self-employed, those in existing self-certified mortgages and people with negative equity.  

“The new regulations appear to have struck a reasonable balance between allowing lenders flexibility when assessing affordability, whilst maintaining a sensible level of consumer protection.”

Peter Williams, executive director of the Intermediary Mortgage Lenders Association, says overall, the MMR announcement shows many positive signs of the FSA listening and responding to the industry.

He says: “The new regime is not due until 2013 and there is the issue of transitional treatments but we have another round of consultation and a longish lead time to implementation to deal with this. We hope the momentum built up and the approach adopted by the FSA is not lost as we move towards the new arrangements for regulation.

“Of more immediate concern for IMLA, as we work through the proposals, are questions around the boundaries of some of these issues i.e. what is reasonable, who should be included and who might be defined as vulnerable. We also note that the proposals will have a rolling impact as the market strengthens.

“In that regard, I see the proposals as modestly reducing who can get mortgages now and when the market picks up these belts tighten further. It is clear this will impact most heavily on non-prime with a major contraction of what that market might do if the market overall becomes more buoyant.

’Although the proposals might suggest fewer arrears and repossession cases going forward, it does seem that options for those in difficulty will narrow and this might change the balance between arrears and repossession cases as we move into a downturn.”

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