Cover


AMI is unsure about the move. “We are concerned about service


labels from other sectors being applied to the mortgage industry. We do not think this is appropriate to the industry and will raise this issue with FSA,” it says. There are also still those who say a


shift in tone at the FSA is crucially, not a shift in intent. Paul Broadhead, head of mortgage


policy at the Building Societies’ Association, says there is a distinct lack of joined up thinking with Europe. “The market has already self-


corrected, which may not solve problems indefinitely but it does give us time to understand the regulation that will come out of Europe and then consult thereafter,” he says. “It makes little sense consulting on this without being in full possession of all the facts.” Similarly, the Council of Mortgage


Lenders has expressed concern that this paper still ignores the concept of responsible borrowing. CML director general, Michael


Coogan, says that the big theme running through the mortgage market review, reflected again in this latest consultation paper, is a shift in the balance of responsibility away from the consumer. “We will need to assess carefully


whether there is a risk that, in following this path, the FSA embeds a culture of


by Jayne Chichester, press officer, Council of Mortgage Lenders


The ink had barely dried on the Council of Mortgage Lenders’ 506-page response to the FSA’s consultation paper on responsible lending when the next one was published. The first thoughts from the CML are that yet again the emphasis appears to be on reducing consumers’ responsibilities in the mortgage borrowing process and putting the burden onto lenders and in this case intermediaries. At the


“AS IN THE LAST CONSULTATION PAPER, WE ARE GIVEN NO REAL SENSE OF THE ASSUMED CAPACITY OR ROLE OF THE BORROWERS – ONE OF THE GREAT SILENCES OF THE WHOLE MORTGAGE MARKET REVIEW PROCESS”


consumer apathy in the mortgage market, where someone else will always to be available to blame for the consumer’s financial decision if it goes wrong,” he says. IMLA’s Peter Williams agrees with the


CML. “As in the last consultation paper, we


are given no real sense of the assumed capacity or role of the borrower – one of the great silences of the whole Mortgage


Mortgage Industry Conference and Exhibition (MICE) in November, Sheila Nicoll of the FSA claimed this idea was one of many myths that had sprung up around the MMR and it couldn’t be further from the truth. She also said they were working with the former FSA financial capability department, now the independent Consumer Financial Education Board, which is aiming towards a nation of consumers who are financially capable and able to make their own decisions. But we are still to be convinced. This review seems to be sending the UK down a completely different path where responsible borrowing is a distant second to


26 mortgage introducer DECEMBER 2010


Market Review process,” he says. The BSA is also on the same page. “There’s definitely been a shift from the


discussion paper to this,” says Broadhead. “But there’s still a hell of a long way to go. There has to be a government debate on the future shape of the market and then FSA will know how to regulate. This paper is a shift in tone but not in direction. The end result still not going to be any different and we’re still not relaxed about it.” Brokers too are mindful of this balance


of responsibility. “I have deep concerns that it could


encourage consumers to be even more apathetic about the need to take some responsibility as there is always someone to blame,” says Rob Clifford, founder of If I Were You Finance. And Ray Boulger adds: “The concept


of irresponsible borrowing is one the EU is embracing but I’m not so sure the FSA is thinking about that. It’s at least as important as irresponsible lending.” David Geale, acting sector leader for


retail intermediaries and mortgages at the FSA, said the view expressed by the CML would form part of the consultation process for CP10/28 and declined to comment further.


the times they Are A-ChAngin’ Overall, CP10/28 looks as though its


responsible lending - one that conflicts with European proposals to develop a balanced approach. The proposals also suggest that


intermediaries will no longer have a regulatory responsibility to assess the affordability of a mortgage for a borrower. That burden will fall solely on lenders - but intermediaries will still have to measure the “appropriateness” of the mortgage and whether the borrower is likely to fit the lender’s criteria. This seems to point towards duplication of effort, as an appropriateness test will in effect require an affordability assessment, which will subsequently be duplicated by the lender.


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