With the closing date for submissions to the Mortgage Market Review now passed, for those keen to influence the thinking of the Financial Services Authority the real work starts now.
As our lead story on page 4 this week explains, top of the list of things to wrest back from the regulatory rubbish pile is fast-track. When the MMR came out in October many in the industry were critical of the FSA’s decision to lump fast-track in with self-cert – one is a product, the other a service.
Sesame Bankhall Group argues that sustainable mortgage lending could be at risk if fast-track is banned, while the Association of Mortgage Intermediaries says evidence has yet to be presented that fast-track has caused significant consumer detriment. This is backed up by hard data from Santander, which maintains that the arrears performance of fast-track loans simply does not support the customer detriment argument. There are also fears that the individual regulation of brokers could result in lenders wanting to only deal with the largest distributors if the cost of individual regulation is seen as unattractive.
The proposals in the MMR, if acted on in their entirety, could result in the most radical shake-up of the market for decades. But while many ideas are well thought through – and plenty of professionals think they should have been implemented five years ago on Mortgage Day – the danger of unintended consequences from too severe a regulatory regime is real.
The market had the rug pulled from under its feet in 2009. This year it’s getting back on its feet and will hopefully start to walk again in 2011 and run in 2012. But too tight a regulatory grip runs the risk of impeding its development.