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.
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