New beginnings, clear horizons

As we settle in to 2010 and the new decade, the new world for mortgages is becoming a little clearer.  We have seen the first re-brand of a lender, uniquely before launch. 

The brand formerly known as Checkmate is acquiring an entire management structure with an appropriately skilled executive and non-executive team, to satisfy the new rigour being employed by the FSA. 

We have to trust that this new approach from Canary Wharf delivers better products and processes capable of sustaining sound commercial judgement. 

The target is that any newly approved lender has the team and plan capable of coping with whatever the market will throw at them in the future.  This has to be the right objective.

History tells us however that this may not be borne out in reality. 

Regulatory intervention to protect holders of final salary pension schemes is now seen by some as having only served to drive such schemes from the market. 

Controls and guidance on With Profits may have made them safer, but applied restrictions that make them such anodyne performers that they deliver no risk return premium to cash.

This is why I worry about the MMR. The FSA is staffed by lots of very good people with the right objectives and positive intentions.  It is their intention to do the right thing.  In that they have our full support. 

That was the case with Pensions and With Profits.  It is however unfortunate that sometimes when government or regulators interfere in markets and products, their actions can have unintended consequences. 

I am hoping that having started the discussions, listened to feedback and analysed all the data, that we will now enjoy a short period of calm reflection.

Where we assess carefully what the objectives are.  Where we consider what are the issues which need to be addressed, to deal with the risks of today, not those of yesteryear. 

Perhaps we need a prioritised list of issues and a list of optimal solutions.  In undertaking the work to date the FSA has done a great job in getting all the issues out on the table and debating a great range of solutions. 

The trick now is applying the most appropriate and proportionate remedies that deliver a safer market without unduly constraining its ability to operate effectively and grow.  

We all need toaccept that the old days are gone, but over-regulation risks hindering a return to a “normal” market.  By working together, regulator, lenders and brokers, we should not over-shoot the target and impede growth.