CML slammed for using scare tactics over MMR

MICHAEL COOGAN: URGES FSA TO RE-CONSULT
MICHAEL COOGAN: URGES FSA TO RE-CONSULT

A non-executive board member of the Financial Services Authority has slammed the Council of Mortgage Lenders for using “ridiculous propaganda”.

Last week at a seminar on responsible lending in London, the trade body released findings of two CML-commissioned reports by Oxera and Polaris on the impact the Mortgage Market Review’s responsible lending proposals would have.

Both reports are damning and suggest the proposals will result in a range of negative, unintended outcomes for the market.

Mick McAteer, a non-executive board member at the FSA and director of the Financial Inclusion Centre – a not-for-profit think tank – has questioned the independence of the reports.

Attending the seminar in his capacity as FIC director, he told delegates: “I look forward to reading these reports because they appear to be just ridiculous propaganda. It is counter-productive for the CML to use scare tactics over every little thing from taxes to falling house prices.”

He called for the CML to show some contrition and take responsibility for its role in reckless lending.

He says: “Its members contributed to a sustained per-iod of reckless lending which pushed up property prices. It would help if the CML was even-handed after one of the biggest market failures this country has seen.”

But a CML spokesman says: “This research has been conducted by independent bodies and it was made clear to them that they were under no pressure from the CML. We have not had our hands all over the reports.”

The Oxera report says the proposals on responsible lending could force lenders to pay compensation on fraudulent mortgage applications.
It says: “If the information turns out to be fraudulent, lenders could still be required to provide compensation to borrowers on the basis that the loan was unsuitable when ass-essed against the borrowers’ actual income.”

Michael Coogan, director-general of the CML, used the seminar to urge the FSA to re-consult on its rules and urged those in the sector to write to relevant ministers and local MPs to fight the MMR.

But an FSA spokeswoman says: “It is imperative that we ensure lenders act responsibly and do not return to irresponsible practices to protect consumers from taking on mortgages they cannot afford and potentially losing their homes.”