Responding to the FSA’s consultation paper Mortgage Market Review: Arrears and Approved Persons, the BSA is supportive of the aims in relation to arrears, but maintains that rule changes alone will not be sufficient to protect consumers.
It believes any rule changes must be supported by robust supervision, and where failings are identified, enforcement action should be swift to minimise further detriment to borrowers.
The Association also said that the final design of the approved persons regime for mortgage advisers should be considered as part of its consultation on selling standards, intermediary affordability assessments and professionalism expected at the end of the year. Going ahead with the system earlier risks the FSA having to amend the new regime soon after its introduction.
Paul Broadhead, head of mortgage policy at the BSA, says: “Building societies and the majority of other lenders abide by the current arrears rules and ensure they adopt approaches that are fair to borrowers. The FSA itself found that poor practices that were identified in some lenders are not indicative of the industry as a whole.
“We support the FSA’s attempts to identify firms seeking to circumvent the rules and take action against them. However, rules alone will not stop miscreant firms treating borrowers unfairly. It is crucial that the supervision of firms is robust and, where necessary, enforcement action is swift and effective.
“It seems illogical for the FSA to introduce an approved persons regime for the provision of mortgage advice prior to finalising the definitions that will be applied to the sale and distribution of mortgages.
“By putting the cart before the horse the FSA runs the risk that the new regime will have to be amended soon after its introduction, to the financial detriment of firms and the confusion of consumers.”