The Power Hour
Top left to bottom right: Andrew Montlake, communications director, Coreco; Matt Smith, senior policy adviser, Council of Mortgage Lenders; Robert Sinclair, director, Association of Mortgage Intermediaries; James Prosser, show director, Mortgage Business Expo; Ray Boulger, senior technical director, John Charcol; Jonathan Cornell, communications director, First Action Finance
borrowing in the directive is better than having no reference at all. It may not have much impact but at least it goes a little bit further than the FSA. Although the battle has probably already been lost there’s still scope to make public arguments now. MS: I think the outline on consumer responsibility in this directive is similar to the MMR in that when you apply for a loan and supply information on your income and outgoings you are supposed to think about whether it’s appropriate for you to take out that loan. I wouldn’t necessarily agree with either however – producing a piece of paper doesn’t necessarily mean you’re thinking about the commitment you’re undertaking or the implications it has for you going forward. The other point of note is that in the
recital is does broadly discuss that consumers are responsible for their actions and ultimately responsible for their decisions which is a point that the
40 mortgage introducer MAY 2011
FSA in the MMR has played down, suggesting that consumers need protection from themselves. The Treasury appears to have taken
this back to the fact that consumers are ultimately responsible for themselves have now made this a secondary principle for both new regulators under the new system when the FSA is disbanded.
THe direcTive says inTermediaries and lenders “sHould Take inTo accounT all necessary facTors THaT could influence a consumer’s abiliTy To rePay over THe lifeTime of THe loan, including buT noT limiTed To income, regular exPendiTures, crediT score, PasT
crediT HisTory, abiliTy To Handle inTeresT raTe adjusTmenTs and exisTing crediT commiTmenTs”. HoW can brokers assess THis realisTically? RB: In order for lenders or intermediaries to be able to assess suitability of a loan over its lifetime they would have to ask intrusive questions including whether and when couples plan to have children, how they plan to educate them, how many they want. I’m not sure it’s legal for lenders to ask this sort of question. RS: Part of this is how much the consumer will understand as well. That takes yet more responsibility away from the consumer as well as it becomes incumbent on the lender or intermediary to make a judgement about the person they are talking to and whether the language you use is appropriate for that “type” of customer. That’s an immensely difficult judgement for an intermediary or
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