In its response to the MMR, the CML argues its proposals on responsible lending go too far and the regulations do not accurately reflect policy.
It therefore believes another full consultation, together with draft rules, is needed to ensure consistency and a proportionate intervention.
The CML says there is a risk that the FSA’s proposed single standard to cover both advised and non-advised mortgage sales will create as much confusion as it aims to resolve, as it is likely to lead consumers to believe they have received advice when they have not and introduce an advice-only sales process in all but name.
Furthermore, the trade body states the plans are likely to increase firms’ costs and reduce consumer choice regarding how people buy their mortgage.
It says the proposals seem disproportionate because performance data shows non-advised and execution-only sales have produced adequate outcomes for the majority of borrowers who have chosen them.
CML director general Michael Coogan says: “Responsible lending and distribution are inextricably linked, so dealing with possible rule changes in separate consultations helps neither the FSA nor the industry take a coherent overview of the impacts of the MMR.
“From what we have seen to date, we believe the interventions proposed are disproportionate and not backed by the evidence.
“We stand ready to work with the FSA on a set of rules which should deliver their policy outcomes and would deliver real benefits to borrowers in the future.”