CML says keeping the FSA is good news for lenders
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The Council of Mortgage Lenders has supported the idea of the new Government keeping the FSA as its removal would have “far-reaching consequences” for lenders.
In its fortnightly newsletter, News & Views, the trade body welcomed reports that the FSA would be retained, saying that regulatory instability would ruin the progress of the mortgage market review.
It says: “That is good news for lenders, given that the FSA has already made considerable progress on its comprehensive mortgage market review. Instability for the regulator would disrupt this process, with far-reaching consequences for lenders including a considerable increase in costs for firms and consumers.”
However, the CML is concerned the coalition document published on May 11 made no reference to the shortage of mortgage funding. The trade body says this should be the priority of the new Government and it should put in place a transition scheme to wean the industry off government-backed funding.
The newsletter says: “Regrettably, the coalition document published by the Conservatives and Liberal Democrats on 11 May made no reference to the shortage of mortgage funding. We believe, however, that this should be a high priority for the new government. The Bank of England and Treasury have supported the financial system through liquidity and credit guarantee schemes, but these are due to be withdrawn over the next four years.
“Ultimately, lenders want a private solution to the funding gap. But support is needed to manage the transition from existing Bank and Treasury schemes. Withdrawing those schemes without providing support is likely to reinforce the existing shortage of mortgage funding, creating additional problems for many customers, including first-time buyers.”
The CML has also warned against restricting lenders’ repossession powers, which could potentially restrict mortgage funding.
It says: “Although lenders already take possession only as a last resort – and courts will not uphold its use in any other way – the Liberal Democrats had proposed court reforms in their election manifesto. We are concerned, however, that any action preventing a lender from taking possession as a last resort could unintentionally further restrict the availability of mortgage funding.”
The trade body welcomed the abolition of home improvement packs, saying they “impose additional costs on buyers and sellers of property through the unnecessary duplication of searches.”
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Readers' comments (7)
Alan Parkinson | 19 May 2010 9:32 am
Madness, I wonder if any of the council members have actually sat down with a client and tried to process a mortgage under the current stifling regulations.
Perhaps they should and they may well take a different view.
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James | 19 May 2010 9:37 am
Not wishing to comment on the rights and wrongs of the FSA but would like to comment on a couple of other issues.
1) Wasnt it a Tory pledge to scrap the FSA if granted power? And for those that will cite a coalition is in power not a tory government.I ask those to google Vince Cable FSA then have a read of what Vince has to say about the FSA.........................To imply voters have been conned on this matter would be rude as no concrete ruling has come out yet,but I feel "weve been robbed" t-shirts will sell well soon.
2) Just goes to show once again how much the so called trade bodies are out of step with the grass roots of the real industry.A week before election wasnt there a set of stats produced here,claiming that something like 52-55% of IFA now wanted a Tory government,as opposed to a Labour one,whose support had fell from 29% to 8%.with the Tories pledging to scrap the FSA one can only imagine this to be at least a factor...............eyt here we have a trade association thinking keeping the FSA is a good idea?
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terry | 19 May 2010 9:40 am
The Building Societies would say that wouldnt they. They are no different to the banks. Some of the things done by Building Societies that I have seen would make you cringe. Wait untill the FSA concentrate on them like they do the IFA,s and watch them squeal.
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Toddy | 19 May 2010 10:00 am
I am sure the lenders are delighted!
What we should be doing next, together with or without AIFA and AMI, is to lobby the politicians to get statutory legislation to stop the close knit relationship between the FSA and the board at the various lenders. There has to be put stop to the high flyers jumping ship like that and really start looking after the consumers by promoting proper advice!
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Phil Castle | 19 May 2010 11:04 am
I suppose for me, it's a bit like the Gulf Wars, I supported the first and think we should have continued on to Basra at least to protect the Marsh Arabs (especially as they were encouraged to revolt), But was and remain totally against our involvement in the second Gulf War. Ftom experience, regime change without a credible system ready to put in place has resulted in more deaths than the actual war. Keeping SOME Baath party members and maintaining the Iraq military would have been very sensible, while removing the leaders and changing the practices.
Replacing the FSA completely (i.e. reinventing the wheel), rather than changing it's structure and bringing it in to line with common law rights MAY be all that is needed and if it proved otehrwise, it could be replaced at a review a year or so later..... Destroying/replacing the whole structure with nothing lined up could result in more IFA and consumer casualties.
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Ewart Matthias | 19 May 2010 12:15 pm
Aaaaaaaaaaaargh, give me strength.
Here we go again, when will this financial services industry learn? We have this mess because we only focus on what is best for our particular niche. The CML are only concerned with their little patch and not with the wider picture. They are ignoring the brokers (who bring in the business) and looking to what is best for them. A similar things was done with Stakeholder pensions, L&G saw a niche market wanted to steal it and said they would do as Sandler wanted and everything for a maximum 1% charge. Look what that has brought us.
We must get away from this narrow minded and selfish focusing and start looking to what it best for everyone - remember united we stand, divided we fall? We will continue to suffer untill we do that.
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toddy | 19 May 2010 5:47 pm
I do not expect the lenders to look out for us they have got their own self-interest.
But I do expect that the FSA and the government of the land follow the rules of this country. I thought there was a section in the FSMA2000 about the efficiency of FSA regulation and if they use their whole budget on regulating and supervising the advisers who statistically receive so few complaints and not much resources on the banks, which receive complaints by the truck loads, then I do not know.
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