Cover
First amongst equals
Sarah Davidson pours over the FSA’s Mortgage Market Review Consultation Paper on Responsible Lending and finds growing discontent within the industry over the FSA’s Orwellian stance when it comes to freedom of choice
Financial Services Authority chairman Lord Adair Turner’s speech to the British Bankers’ Association on July the 13 struck some uneasy chords with many in the mortgage industry. It followed the publication of CP 10/16, the FSA’s proposals on responsible lending, ahead of the Mortgage Market Review regulation being confirmed this Autumn. Among what many brokers and lenders consider sensible proposals, the consultation paper also calls for all mortgages to be assessed on affordability, proof of income and ability to repay the capital on a mortgage. This regulation will eliminate self-certification mortgages, fast-track mortgages and potentially, interest-only mortgages. Lord Turner admitted that this type of market regulation amounted to product regulation and that the decision to eliminate these products required open debate with the industry. He also said that “consumer responsibility, consumer freedom to choose, including freedom to choose products which they
subsequently regret choosing, must remain part of the answer” to that debate.
But many of the industry’s thought leaders have pointed to Lord Turner’s attitude to how far the State should be involved in individuals’ financial affairs as indicative of the FSA’s stance. Turner was quite up front about his view, saying “some financial products and advice may be best delivered with the help of the State”. Eyebrows have been raised in the industry with many of the great and good of the mortgage industry saying Britain’s financial regulator is becoming too political. More worrying still, they say, is that the FSA’s policies seem to contradict what housing minister Grant Shapps MP argued in favour for in his speech “The Age of Aspiration” back in June.
Shapps is in favour of the freedom to choose to own a home, and supportive of that aspiration.
“I believe that home ownership is a 18 mortgage introducer AUGUST 2010
very good thing,” he told the House of Commons. “In fact I will work every day to help people achieve their aspirations to own their home.
“Of course I am not arguing that everyone should somehow aspire to home ownership. Renting a home can be a positive and flexible choice. And social housing provides a sense of security for millions of families. I am simply saying to those who aspire to own their own home - this government will support you. You will not be ignored. The age of aspiration is back.” It appears however, that the age of aspiration is back for some, but not for all.
Power of language Politicians have always wrapped their intentions, good or dubious, in carefully chosen words. Language is a powerful tool, a slippery tool and one that can be grossly misused. The word “some” in Lord Turner’s speech sounded an ominous bell. It
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44