Speaking in London this morning at the CML's annual conference he said that regulators needed to look at the impact of regulation as it could prove to be an obstacle of a functioning housing market, summarising the failures in regulation that he had witnessed in the past three decades.
Smee cited his first law of regulation stating that: “For every intended consequence of regulation there are at least two unintended consequences.
“The unintended questions that can get in the way are over intrusion, dampening the hopes that new entrants have into the market and discouraging reasonable business.”
Smee believed that a good objective for regulation was that it should deliver a proportionate result and not deter legitimate businesses and that the CML would measure the Mortgage Market Review against that.
He continued: “Regulation should shape the market so that no particular firm with a particular model should succeed or fail because of regulation. Regulation should enhance competition in the market and enable new entrants in the market and should be neutral towards them.
“By being over bureaucratic regulation should not just be about the creation of an audit trail and the completion of a set of paperwork. One of the great lessons of regulation in the past three decades is that the substance of regulation has often been buried under a sea of bureaucracy.
“We will assess the new consultation documentation against these principles and we will remember as well that it will be out for consultation so there is going to be a lot more arguing over the detail in the fine print and the CML will be on the lead for that.”
He then provided delegates with "Smee’s second law of regulation for completion" and stated: “Regulation is the only field in economic activity where the reward for failure is an increase in power.”
Smee then called on regulators for proportionality citing his third law of regulation stating: “The more regulatory initiatives started in a crisis, leads to an over-reaction and then a period of several years where you row back from the reaction.”
Looking at the year ahead, Smee concluded with a quote from Mae West: “Hold on to your hats, it’s going to be a bumpy ride.”
