Trade bodies urge the regulator to rethink some MMR proposals
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ROBERT SINCLAIR, EQUITY PROPOSAL LIMITS OPTIONS
The Council of Mortgage Lenders gave its response to the Financial Services Authority’s Mortgage Market Review last week, urging the government to provide a clear strategy on mortgage funding while accusing the FSA of over-reacting with regard to income verification.
The trade body says that with some of its proposals the regulator is over-reacting without enough evidence to justify its actions. It cites the requirement for income verification and the resulting ban on fast-track as an example of the FSA going too far.
In its response to the MMR the CML provides evidence that arrears levels on fast-track business do not justify the need for income verification in all cases.
It wants fast-tracking to continue but with added safeguards.
Michael Coogan, director-general of the CML, says: “The FSA needs to moderate its approach to ensure that regulation does not result in worthless additional cost, or have the undesirable side effect of creating financial exclusion among borrowers who may be well able to sustain a mortgage commitment.”
The Association of Mortgage Intermediaries has also submitted its response to the MMR, focussing on the proposal to restrict equity withdrawals and the classification of non-advised sales.
Robert Sinclair, director of AMI, says: “We are concerned about the proposed limitation on equity withdrawal as this would damage customers’ options.”
He says that AMI also has concerns about how advisers in bank branches are classified.
The regulator plans to rename advised and non-advised sales.
Meanwhile, the Building Societies Association is calling on the FSA to take a more flexible approach when it comes to assessing affordability.
The BSA wants the FSA to focus on areas where there is strong evidence of failure and to consider the cumulative effect of regulatory changes on the market.
It says that reactionary regulatory intervention will deliver little benefit to consumers.
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