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MMR: Proposals will cost industry more

The FSA has raised its estimate for costs resulting from the MMR as it has previously understated the impact of removing non-advised sales.

In the previous draft of the MMR, published in December, the FSA predicted the mortgage industry could be left with an annual bill of between £47m and £170m, and between £42m and £65m in one-off costs, in order to comply with the proposals.

In the final publication, the regulator admits it has underestimated the cost to lenders resulting from its ruling on non-advised sales.

Ongoing compliance costs have now been revised up to between £49m and £172m a year and the one-off cost is expected to fall between £42m and £67m.

In the final draft, the FSA says: “On the basis of research that Oxera conducted for us and the Council of Mortgage Lenders, we expected compliance costs of this proposal to be £0.8m and ongoing compliance costs to be around £1m.”

“However, we have revised our estimate to take into account the fact that some lenders have a much larger percentage of non-advised sales at the moment and may need to recruit additional staff. We now expect one-off compliance costs to be around £2.8m and ongoing compliance costs to be around £3m.”

The cost benefit analysis outlined in the December publication otherwise remains valid, says the FSA.


Prisk: 100,000 NewBuy homes ‘not a target’, just maximum Govt liability

NewBuy will only supply a quarter of the 100,000 new homes it was set up to provide, according to the Home Builders Federation. Under the scheme, which was officially launched in March this year, lenders offer 95 per cent LTV mortgages for new-build properties against a mortgage indemnity guarantee funded jointly by the Government and […]


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