Housing minister Grant Shapps has sensationally hit out at the Mortgage Market Review, branding it down-in-the-dirt regulation and a step too far.
Speaking at the National House-Building Council annual conference last week, Shapps told delegates that the Financial Services Authority’s current proposals would prevent him from getting a mortgage.
He says: “At the point when I realised I wouldn’t be able to get a mortgage if the proposals went through, I thought this might be a step too far.”
He says problems in the mortgage market did not stem from “pernickety” issues such as how much someone can borrow or what forms they sign. Shapps says: “The problems occurred because of a lack of central regulation around the way banks were operating and their ability to carry on when they didn’t have the balance sheet to do so.”
He adds: “We need top-level central regulation and not pernickety down-in-the-dirt regulation about what a company can and can’t do.
“Shapps says the FSA is independent and entitled to produce the MMR, but he urged it to learn from mistakes.
He adds: “I hope the FSA will get that message.”
On the subject of mortgage availability, he says there is no “whizz-bang solution” – and having only five lenders in the market is a problem.
He says: “We’ve got a banking review, which reports next summer, and that will propose the way forward for banks, particularly those that are nationalised. I’m sure it will result in greater competition and diverse mortgage products.”
The Council of Mortgage Lenders recently called for a political debate into the MMR.
A spokeswoman for the CML says: “We are pleased the housing minister has entered the debate about the MMR as we hoped ministers would. The effect of the FSA proposals are far reaching and it is appropriate for a political debate, it is not just a technical regulatory issue.”
An industry source who was at the conference, says: “It was encouraging to hear Shapps’ view, but the proof will be in the pudding when the final rules are released.”
But he says there is a consensus in the industry that the FSA is softening its approach and backing down on a lot of its proposals.
A spokeswoman for the FSA, says: “We are in a consultation and welcome feedback from interested parties. It is a consultation and we have not made our minds up yet.”