The Building Societies Association is calling for a government debate over the future of the mortgage market before the Mortgage Market Review is enacted, as it responds to the Financial Services Authority’s Responsible Lending Consultation.
The BSA argues that it is not the role of the FSA to bring forward rule changes that would have a profound effect on the housing market, social mobility and aspirant homeowners.
Paul Broadhead, head of mortgage policy, says: “The proposals in the responsible lending consultation could have far reaching consequences in relation to the wider economy. It is for the Government to provide a clear plan of their housing policy objectives. It will then be imperative to assess whether regulatory proposals facilitate the desired outcomes for UK consumers or present further obstruction.
“It is not the role of appointed regulatory officials to determine the shape of such a major part of the UK economy, nor is it their role to attempt to control demand through prescriptive and restrictive conduct of business rules.
“This is the role of elected representatives and we would urge the Government to make this debate a priority.”
He says mutual lenders have a good track record of responsible lending but many of the proposals are a ‘one size fits all’ approach which attempt to shoehorn mutuals into large bank processes.
Broadhead adds: “Competition and diversity are of vital importance to ensure a sustainable and vibrant market, which offers choice for consumers. A market dominated by a small number of large banks is not desirable in the long term and does not meet the FSA objectives of a sustainable and flexible market.”