brought to mind another political statement in which the word “some” carries a very heavy irony. That statement is the amended seventh commandment in George Orwell’s 1946 novel parodying the Russian revolution, ‘Animal Farm’: “All animals are equal, but some animals are more equal than others.” While Turner’s vision for the mortgage market is clearly far from the fascist dictatorship parodied in ‘Animal Farm’ there are uncomfortable parallels between Orwell’s writing and Turner’s sentiments.


In his speech, Lord Turner said: “In the past our philosophy was that, as long as product terms were clear, then borrowers themselves would be well placed to assess affordability; and that lenders would rationally offer products which customers could afford – because it was in their self-interest to manage credit risks responsibly. “Now, however – for consumer


protection as well as prudential reasons – we are proposing to significantly strengthen the requirement for lenders to assess affordability, to ensure that the borrower is likely to be able to repay the loan.”


He acknowledged that this


represented a “major shift” in the FSA’s “willingness to intervene in the free market relationships through which borrowers and lenders would otherwise make their own free choices about appropriateness, risk and return”. It is this shift – from regulatory to ideologically and socially influential, from free market to managed market – that many in the mortgage industry are wary of.


resPonsibility Should the FSA, a collection of appointed individuals, have the responsibility, remit, let alone right, to set regulation which impinges on our individual freedoms to choose what we do with our money, how we live and what risk we decide we want to take on personally? Peter Williams, executive chairman of


the Intermediary Mortgage Lenders Association, is of the view that the MMR is becoming increasingly political, saying that “as Lord Turner’s speech to the British Bankers’ Association showed, I think we’re now going to see the technical arguments about the mortgage market give way to political arguments. “These aren’t simple technical


that the FSA press office then distributed the speech in written format. Lord Adair Turner was unavailable for further comment and the FSA said it did not have another suitable spokesperson on the subject of how its regulatory policy would impact on society. “While we touch on striking the right balance in terms of consumer protection and the consumer taking responsibility within our discussion paper back in October, and in this


choices


about whether you restrict x or y – they now have


political consequences. The IMLA view is we run the risk of a regulatory response which is overstated and makes the market too restricted.” The FSA press office said that Lord Turner’s speech represented his own personal views of economic behaviour and could not be attributed to the body as reflective of policy. That seems tenuous to say the least given that Lord Turner was speaking to the country’s top bankers, financial services professionals and British media as the chairman of the Financial Services Authority at the BBA annual conference. And


mortgage introducer AUGUST 2010 19


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