MMR was flawed from the outset and should be deferred, says CML


The Mortgage Market Review will cause more problems than it solves and should be put on hold, according to the Council of Mortgage Lenders.

Speaking at the recent Mortgage Strategy Summit at the Luton Hoo Hotel in Bedfordshire, Michael Coogan, chairman of the CML, told del-gates that the Financial Services Authority’s MMR made the outlook for the mortgage market more uncertain.

He says the review throws up questions about when proposals such as the extension of the app-roved persons regime and the re-quirement for income verification on all mortgage applications are going to be implemented.

Coogan says: “Overall, the MMR is more likely to be part of the problem than the solution – it should be deferred.”

He goes on to explain that the FSA’s original basis for reform no longer stands up as the regulator was working on the assumption that measures would be introduced when the economy and mortgage market had recovered.

Coogan adds: “The fundamental flaw in the MMR is that the FSA’s cost-benefit analysis is based on a market that has got its strength back, and it clearly hasn’t. So the idea was flawed from the outset in terms of the structure for justifying the review. The problem is that now we’re on the hook.

“There is a risk that it could accentuate the negative market environment if the MMR is implemented, rather than delivering the desired outcome of a flexible and competitive environment.”

Coogan says it is essential that the broker distribution channel is maintained.

The CML is working with the Association of Mortgage Interme-diaries and the Intermediary Mort-gage Lenders Association to produce guidance on the responsibilities of lenders and brokers.