View more on these topics

FCA unlikely to loosen the shackles: Clifford

Rob-Clifford-MM-Peach-700.png

Imla may hope for a more optimistic approach from the FCA for those locked out of the market but it faces disappointment

Several interesting white papers published in the past few weeks were designed to assess the market and to propose changes in order to develop a more rounded, fit-for-purpose process.

The Conveyancing Association’s paper focused on the process of purchasing and tried to get to grips with the delays and increasing costs that consumers have to endure. Unsurprisingly, given the number of participants and stakeholders involved, getting to a position where we have a single technology-led system (one of the key ‘blue sky’ suggestions from the paper) could take time. However, that does not mean it is not an endeavour worth pursuing.

To be honest, anything that can aid transparency and communication, and secure upfront information rather than have all parties wait weeks to receive it, will be a huge improvement.

Meanwhile, the Intermediary Mortgage Lenders Association’s white paper looked at the influence of mortgage regulation and how it might have impeded consumer choice, especially for borrowers sitting outside the norm. We are all acutely aware how numerous product types (non-conforming/interest-only/self-certified loans) have been shelved or curtailed as a result of stricter regulation and tighter affordability measures.

Imla argues that an independent review of mortgage regulation might reverse such a trend, which would further the Government’s aim of getting more people into their own home.

Different agenda

I do not think the Financial Conduct Authority is part of this agenda at all, instead focusing on ensuring we do not have another credit crunch or that, if we do, its impact will be far less debilitating for the UK.

Many would argue it was a community focused far too much on delivering loans to all types of people, regardless of their ability to afford the mortgage, that got us into such an almighty mess, and the FCA is well within its rights to insist on lenders meeting this simple rule of thumb.

I suspect, however, in some areas (notably lending into retirement and to existing borrowers who do not want to add to their loan) the FCA will have been surprised at the gold-plating of its rules. In essence, the regulator is right about lending in these specified ‘zones’. However, it does not want lenders chasing business in areas where it believes there is greater risk.

Just recently, the FCA outlined how lenders (and brokers) were becoming more active in non-mainstream areas: right-to-buy, debt consolidation and credit-impaired loans, specifically. There was nothing to suggest it was comfortable with such an increase. In fact, there was everything to suggest it would be keeping a watchful brief with the intention of acting decisively if it felt business levels were increasing too fast.

So, while Imla may hope for a more optimistic approach from the regulator for those it deems to have been locked out of the market in recent years, my inclination is that the FCA feels it has got its approach just right.

Rob Clifford is group commercial director at the SDL Group

Recommended

Andrew-Montlake-700.jpg

Market Watch: Will there be room at the inn?

Libor has fallen with the temperature to 0.38 per cent, while swap rates have gone out to do a bit of Christmas shopping A report out recently from Hometrack found that the gap between income and house prices had reached record levels in some places. The news itself is not that surprising but the figures are […]

John Heron

Paragon to hike ICR for high-tax landlords to 140%

Paragon is increasing its interest cover ratios for landlords in the higher-rate tax band from 125 per cent to 140 per cent. The lender is making the changes ahead of the increase in costs for landlords when the mortgage interest rate tax relief changes come in next April. The changes come in on 12 April. […]

Fixed-Income-Portfolio-Coins-Pounds-Growth-700x450.jpg

Chelsea BS launches 1.83% four-year fix

Chelsea Building Society has launched a four-year fixed rate mortgage at 1.83 per cent and 65 per cent LTV. The loan is currently the cheapest four-year fix on the market and is available to borrowers who are either buying a home or remortgaging. It has a £995 product fee and can be bought online or […]

Pensions - thumbnail

Mothers missing out on millions

New HMRC figures show number of ‘mothers missing out on millions’ in pension rights has doubled in two years – Steve Webb Figures published on 24th March by HM Revenue & Customs show a doubling in the number of mothers missing out unnecessarily on vital pension rights because of a change in the rules on Child […]