The Mortgage Market Review edged a step closer to becoming a political issue last week after an MP hit out at the regulator for creating a reign of fear.
In a Treasury Select Committee meeting on financial regulation, Labour MP George Mudie spoke out against what he describes as the Financial Services Authority’s reign of fear on mortgages.
He was hearing evidence from Mark Hoban, financial secretary to the Treasury, on whether the FSA or the new regulatory structure in 2012 should be independent of the government.
Mudie told the committee: “The full horror of the FSA’s reign of fear on mortgages has not yet percolated down and people do not understand why mortgages are so scarce.
“It is difficult to get a mortgage without a big deposit if you are a first-time buyer and if you are self-employed, the phrase seems to be hard luck.”
He questioned whether at a time when the construction industry is reliant on the mortgage sector, it is wise to have a regulator that is not more answerable to Parliament.
Mudie adds: “The last word seems to be with the FSA. Is nobody in the Treasury or government uncomfortable about that?”
Hoban responded that the regulator does respect the opinions of parliament and the Treasury Select Committee, but added that there is a risk that its independence and authority could be undermined if it is politicised.Housing minister Grant Shapps recently branded the MMR a step too far, saying it would prevent him from getting a mortgage.
Stephen Smith, director of hous-ing policy at Legal and General, says this could be the start of the political debate on the MMR.
He says: “There should be no letup in the industry’s lobbying across all bodies that can influence the FSA such as the Financial Services Consumer Panel.”