MMR: Consumer responsibility should not be lost, says CML
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The Council of Mortgage Lenders says the FSA must not lose sight of consumer responsibility if it decides to introduce measures to “protect consumers from themselves”.
It says it’s ironic that at the same time as politicians are seeking to encourage lenders to increase their flow of mortgage lending to consumers, they are also keen to take steps to address the perception of “irresponsible lending”.
The CML calls some of the wider political rhetoric around lending issues more conducive to “rabble-rousing” than to properly considered debate.
It says it is interesting to see the FSA note that it believes regulation cannot rely on the notion of borrowers behaving rationally - that is, in their own interests - and that the regulator may instead need to introduce measures to “protect consumers from themselves”.
It feels it is important that the principle of consumer responsibility is not lost in such a regulatory environment, as it is a basic tenet upon which transactions of all kinds between firms and consumers rely.
Michael Coogan, director general of the CML, says: “We agree with the FSA that regulation in itself cannot resolve the problems of the recent market. However, we also agree that clearly delineated responsibilities, which remove regulatory ambivalence, will help lenders, intermediaries and consumers to know where they stand, and to accept the consequences of their actions.
“As always with regulatory change, the devil may be in the detail. But we welcome the consultative approach, and look forward to working with the FSA to ensure that the objective of regulatory fairness between lenders, intermediaries and consumers is achieved in practice.”
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Readers' comments (1)
Tony Joannou | 19 Oct 2009 3:19 pm
When I was at school more years ago than I care to admit now, there were a couple of lads in my class that continually caused trouble. Instead of punishing those two individuals the teachers always found it easier to punish the whole class and as a result we all lost out.
Move on and I find myself now being punished again. This time its with a regulator who rather than punish the odd miscreant, finds it easier to say all must suffer.
Now anyone working in the mortgage industry will have heard of a few abuses of the self cert mortgage, however that does not mean it does not have it place. I rarely did any self cert mortgages but on the odd occasion, a client wouldn't fit main stream criteria but you could still assist through the use of a self cert mortgage. As long as the cost of this type of mortgage was fully explained to a client, then it should be their decision and more importantly their responsibilty.
I read somewhere today that 45% of all mortgages taken out in 2007 where on a self cert basis. I find that difficult to accept but if it were accurate, the FSA has just abandoned 45% of mortgage holders to variable rate misery as they will not be able to escape the clutches of their existing lender when rates rise.
If anyone is going to be responsible for increasing the reposession rate and prolonging the recession it will be the FSA.
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