With the end of the year almost upon us, there has now been enough time to digest the FSA’s latest Mortgage Market Review guidance and the publication was mercifully free of any last-minute curveballs.
The regulator has taken a common-sense approach to many of the issues currently blighting the industry and shown a willingness to tackle underlying problems such as the interest-only conundrum.
Its clarification on the last point was particularly welcome and probably necessary in a ‘compensation culture’ society where borrowers often fail to take enough responsibility.
The FSA has re-emphasised the fact that the repayment responsibility lies with the borrower and this reduces the unfair expectancy that lenders should somehow be able to predict the future. It is also encouraging to hear the regulator intends to publish a thematic review early next year concerning existing interest-only borrowers who are unable to repay the capital element of their interest-only loan.
There have been calls from some quarters to abolish the products altogether, but reducing product choice even further at the minute is not the right course of action and the FSA’s sensible call is correct. The regulator’s redefined position on allowing high net-worth borrowers to opt out of advice is also a belated recognition of the different circumstances such individuals face and is a constructive example of the FSA taking on board market feedback.
At the end of the day, much of the emphasis of the MMR is about delivering a mortgage market that works better for consumers and is sustainable for its participants and taking a common-sense approach to such matters gives us a more realistic hope of achieving this.