The Building Societies Association has slammed the “irrational pessimism” that is leading to a revolution in mortgage regulation.
Speaking at the BSA annual lunch David Webster, chairman of the BSA, says the latest changes proposed by the Financial Services Authority and the EU create nothing short of a “revolution”.
He says: “The Mortgage Market Review represents a regulatory solution to a problem the market has already resolved.”
And Webster says it would be very helpful if they could see the authorities’ analysis of the impact of regulation.
He says: “I cannot ignore the vast programme of regulatory change occurring at the moment that affects, or will affect almost every area of our business, we’re having the Mortgage Market Review, and we’re going to have the EU’s Responsible Lending policy.
“More onerous and expensive liquidity arrangements are already with us and we’re having capital requirements increased, and more tightly defined. And we face a complete overhaul of the regulatory systems as the FSA disappears and is replaced by a new system with the Bank of England at its heart.
“Given the huge changes in the markets we have already seen, does the regulatory revolution represent overkill?
“Yes, there were certainly examples of irrational exuberance on the part of institutions in the run-up to 2007, but there are also currently examples of irrational pessimism on the part of regulators as they seek to address the problems of recent years in what might be far too restrictive a manner, given the need to create the conditions for continued economic recovery.”