past few years. do we really want to stymie this area with increased regulatory detail and pressures? i hope not.
Alan Cleary,
managing director, Precise Mortgages
As if we haven’t got enough regulatory change to worry about, along comes
a bunch of bureaucrats from brussels telling us that consumers would benefit from cross border competition when it comes to mortgages. Whilst i get the logic i can’t help but think the uK is going to come off worse as a result. the uK has the most regulated mortgage market in the eu if not the world and the distribution route of choice is tipped towards mortgage intermediaries. this differs massively from the rest of europe where home ownership is not as aspirational as in the uK and mortgage intermediaries are much less of a force. i fear we will come out with a
botched set of regulations that have been so watered down as to be meaningless or even worse dominated by the French and germans’ interests which are not aligned with ours. Whilst i am pro-regulation in the buy-to-let space i want it to be proportional and beneficial and driven by the uK; unfortunately buy-to-let is very much in the sights of brussels and it looks highly likely that they will push for regulation across the eu. in turn this will catch a large section of the short-term lending markets and will have unforeseen consequences for us all. clearly, all
lenders and brokers will have to have a view about how this might pan out and this undoubtedly will create additional cost. regulation, whether driven
by domestic or foreign bodies, tends to favour larger lenders and intermediaries so we could well see the network model gaining ground. the only plus point i can see for us is that it will take years to implement.
Rob Killeen
Mortgage broker Capital Fortune
the issue of european directives impacting on regulation here
in the uK remains an interesting debate.
Whilst there is continued concern that further european regulation may catch all bridging lending and buy-to-lets its actual impact and implementation for us as a company, remains to be seen. Many commentators are now stating further regulation is a ‘done deal’ despite ongoing lobbying by the council of Mortgage Lenders and the Association of Mortgage intermediaries. the proposed directives are yet to go through to the european Parliament in brussels, but even if passed and buy-to-let and bridging finance were deemed regulated requiring an amendment to regulated activities under the Financial Services and Market Act 2000, it wouldn’t be the first european directive to be ignored or to inevitably face a future legal challenge. one such directive at odds with
the uK regulator is the european ruling that all declines on a mortgage case must be coupled with
an appropriate level of explanation and reasons given to the client. the FSA has taken a bold step and indicated that lenders should not be compelled to give reasons, indicating that to do so empowers and gives important information to fraudsters. this is another area, where european regulators may have to pay second fiddle to uK regulation, however this will likely be only short-term as it remains wide open to challenge. From a legal perspective, and a market-liberalist philosophy, it is right that national lenders should give proper explanations for a mortgage decline. this seems only fair and within the spirit of treating customers fairly. in the case of a “reasonable” as opposed to “fanciful” suspicion of fraud, the lender could always exempt itself from explanation, under the Proceeds of crime Act, under its money laundering provisions. but this should not apply to a standard policy and not in the 90% of cases where fraud is not evident. the point of regulation is to ensure customers obtain a fair deal. Fair deals in finance should apply as much to commercial as it does to all credit cards, mortgages and loans. Fair is not broker specific, but should be across the spectrum of all financial service providers and their agents. Any bridging or buy-to-let transaction usually involves a significant financial transaction and until institutions and individuals wake up to the fact that customers in the uK, do not get a fair deal, (a preserve not just restricted to financial services), then perhaps further regulation is actually necessary and long overdue. We work closely with our lender partners and support them where appropriate, but the lack of regulation assisted in causing the financial mess we are in today. n
Bridging introducer july 2011 37
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