Today, Jayne Chichester from the Council of Mortgage Lenders, shares the CML’s thoughts and opinions.
“For the Council of Mortgage Lenders the focus of 2010 can be summed up in three small letters – MMR. The mortgage market review represents a major threat to the future of the industry. This is why we have campaigned so hard, and funded independent research to provide credible evidence about the impact on the industry and, more importantly, on consumers.
The start of 2010 saw us submit our response to the original MMR discussion paper, and we could already see that extra layers of regulation could lead to additional cost to lenders and potentially exclude a large number of borrowers who would be perfectly able to sustain their mortgage commitment.
The next part of the review was the consultation paper on arrears and approved persons. Oddly, it was published four days before the deadline for responses to the discussion paper, leading the CML to wonder how much the FSA was actually listening to the industry. The responses were due in April and one of our comments centred on lenders keeping records of calls made to borrowers in arrears for three years from the date the shortfall was cleared. We observed that in certain cases this could mean calls would have to be kept for the entire duration of the loan - up to 25 years or more and made a more practical suggestion that calls be kept for three years from the date of communication. We were pleased to see the FSA heed our suggestion and make the change in the policy document issued in June.
We responded to the approved persons part separately, observing that there would be unintended consequences to introducing uniform authorisation to intermediaries and lenders. In the policy document we were at least pleased to see clarification about which staff would be affected by the proposed rules and that they would not unintentionally capture administration staff.
September brought our response to the non-banks and interest-only part of responsible lending and we warned that the proposals, as drafted, would effectively cause interest-only mortgages to vanish and risk driving non-banks from the market completely.
As I write, the deadline for responses on perhaps the most controversial consultation paper – responsible lending – is looming. The CML, in order to promote open debate on the subject, as suggested by Adair Turner, has undertaken its own research and funded independent research to demonstrate the significant potential impact implementing the proposed rules would have on consumers and the industry.
And it’s not over yet. We are currently preparing for the next consultation paper due out at the end of November (before this goes to print) - on disclosure and distribution and further policy announcements on interest-only and non-banks.
When we were not engrossed in the MMR we continued to report stagnant lending figures – mainly due lenders experiencing a shortage of funding – throughout the year. This is a market feature that could be cemented in place for the foreseeable future if the FSA implements its proposals in their entirety.
We know the normal market of the future will look nothing like the past highs or lows and we are not against reform. But if we want a healthy sustainable home finance industry, going down the route of layer over layer of excessive regulation is not the way.”
