The FSA is to be praised for its final mortgage market review plans, which strike the right balance of guarding against irresponsible lending without unduly affecting current and future borrowers.
Some of the regulator’s previous proposals would have severely restricted the market and harmed those existing borrowers unable to remortgage away from current deals.
But the FSA listened carefully to the views of industry and consumer groups and crafted a sensible set of proposals.
Tightening up interest-only criteria and requirements for income verification, effectively killing off self-cert, are positive moves aimed at preventing past mistakes being repeated.
Scrapping plans to introduce cumbersome discretionary spend questions as part of affordability assessments and excusing certain existing borrowers from the new affordability rules sees the regulator displaying welcome pragmatism.
Perhaps the bravest and most impressive proposal is the ban on most non-advised sales. Taking out a mortgage is a big financial commitment and borrowers should be able to expect help from well qualified, knowledgeable staff. The grey area between information and advice in the service offered by bank branch staff is unhelpful and confusing for consumers.
Banning most non-advised sales means these people get the protection of the Financial Ombudsman Service while bank staff will have to be properly qualified and abide by suitability rules.
The FSA has stood up against heavy lobbying from some lenders unhappy with the extra costs involved and sent out a message that advice is a positive and valuable commodity.
With less than a year until RDR implementation, we must hope the FSA continues to display a pragmatic and balanced approach to regulation as it monitors the way the industry is gearing up for 2013.
With continuing doubts over the eurozone and recent downgrades to UK growth projections, 2012 is likely to be another tough year.
FSA research suggests half of advisers have the RDR qualifications, with 91 per cent confident on getting them in time, although this may change through the year. Data on business transition is more sketchy, with some concerns that firms are still under-estimating the scale of the changes.
The regulator must keep a close eye on industry trends and be prepared to be flexible with good firms moving in the right direction who may miss the deadline.