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AMI says MMR must not derail market

The Association of Mortgage Intermediaries has warned that proposals in the Financial Service Authority’s Mortgage Market Review will end up protecting a small minority but damaging choice for the majority of borrowers.

In its reponse to the MMR, which has been published today, AMI says that the regulator’s proposals focus on a minority of consumers and have the potential to adversely affect the majority of responsible consumers.   
In summary, AMI has called for:

  • More consumers to have access to mortgage advice
  • Lenders to retain ultimate responsibility for assessing affordability
  • The FSA to not restrict higher LTV and loan-to-income products, so as to not limit equity withdrawal or apply unnecessary controls over debt consolidation
  • Procuration fees to remain as a remuneration option and the decision on remuneration to be agreed between the customer and the adviser
  • The FSA to recognise the fundamental differences between fast-track and self-cert mortgages and ensure that fast-track mortgages, which are appropriate for low-risk consumers, are not banned.

Robert Sinclair, director of AMI, says: “The vast majority of consumers have been well served by the mortgage market.

“We are concerned that the proposed changes, which will protect a small minority, will substantially impact on the choices of the vast majority of consumers.

“The regulator needs to be mindful of negative unintended consequences that regulation could have on a market still in a state of recovery.”

AMI wants to see the regulator do more to boost consumer access to advice, and says that flexible remuneration, including proc fees, should be retained.

The trade body agrees with the FSA’s proposal that lenders should be ultimately responsible for affordability, as they have access to classified client data that is not available to brokers.
AMI has also called on the regulator to distinguish between fast-track and self-cert, and recognise that all consumers do not require the same level of checks.

Sinclair adds: “First and foremost we need to think about how regulation will affect consumers.

” Appropriate controls are necessary, but consumers must not be penalised through an artificial limitation of their choices.”


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  • Michael 12th February 2010 at 4:33 pm

    I would agree with this,but would add that in my opinion,non advised sales should be banned or severely curtailed.

    The FSA has said it wants to retain non advised as consumers want choice,but I believe that this is only because it is the default option for most direct providers when a customer approaches them.Most consumers seem to believe that,on contacting a lender,they will receive only suitable choices.What they are not told is the clear distinction between advised and non advised and given an opportunity to make a choice at that point.

    I have still not met a customer who is able to tell me exactly what mortgage they are looking for in over 15 years.

    That direct providers should be able to get away with non advised mortgage sales with little checks for so long is, to me,unbelieveable.

  • michael white CEO Emailmortgages 11th February 2010 at 3:52 pm

    Absolutely nothing new here from AMI.

    The key issue is the ridiculous autonomy. I would suggest the FSA entitle their future ‘consultation’ papers as ‘Hobson’s papers’ as there is clearly very little choice in the various matters!

    Hector has performed his Pontius washing duties and these myopic boys and girls back at FSA base continue with the fine work of crucifying the mortgage market, in an attempt to create a perfect risk free state of affairs, priceless.

  • sarah smith 11th February 2010 at 3:36 pm

    wasn’t the deadline for responses 30th Jan? If so are we sure AMI have actually sent this in time to be considered?? Also seems like a re-hash of the CML & BSA views, what an odd time to send this out.

  • Mike Fitzgerald 11th February 2010 at 3:26 pm

    I think that AMI are a 100% correct regarding the implications of MMR. The FSA should realise that consumers must be given more choice in the type of mortgages available.It does seem that there is a tendancy to push consumers back to banks and large lenders

    It should be remembered that this world wide recession was caused by banks and not by consumers.This report by the FSA just goes to show that more detailed analysis is required before thes eproposals are implemented

  • Stuart Duncan 11th February 2010 at 2:52 pm

    The AMI are right. The FSA seem to see this as an exercise in credit control disguised as consumer protection, but the majority of their proposals are anti-consumer.

    FSA seem to ignore the fact that existing borrowers are consumers and anyone who has studied these proposals will see that there is severe consumer detriment in many of the proposals, which do indeed have the potential to destroy the housing market and cause a major increase in arrears and repossessions when rates begin to rise and borrowers find themselves trapped with their current lender in their current home.

    It really is that bad!

  • steve 11th February 2010 at 2:51 pm

    Spot on Robert