FSA sees lenders and brokers as "drug-dealers", says CML
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The Council of Mortgage Lenders says it believes the FSA regards mortgage lenders and intermediaries as the “drug-dealers at the school gates”, enticing innocent consumers into the mortgage market and then “getting them hooked”.
Speaking at the CML conference today, CML chairman Matthew Wyles said regulators see consumers as “wanton children” who don’t know what is good for them.
He said: “I have a sneaking suspicion that it’s the way that regulators see consumers - as wanton children who have a tendency to want what isn’t necessarily good for them, and for whom Nanny knows best.
“Increasingly, I also have the feeling that regulators see lenders and intermediaries as the sweetshop owners - or worse, the drug-dealers at the school gates - of the mortgage market, enticing innocent consumers in and then getting them hooked, for their own evil profit-driven purposes.”
Wyles says he sees lenders - once the “fraudsters and the feckless” have been stripped out - as wanting the same thing as the consumer wants.
He said that there has been a backward step during the financial crisis in terms of giving consumers both what they want and what they need and warned that the FSA is moving away from caveat emptor “at great peril”.
He said: “At the risk of stretching this parental analogy a bit too far, most lenders would prefer not to be cast in a paternalistic role. We do not wish to find ourselves in loco parentis, but allowed to treat our customers as adults, helping them if they need it, but respecting their right to make their own decisions.
“That’s not to say we want consumers to lack adequate protection from their own financial naivete or lack of experience - of course we don’t. But there is a balance to be struck. The FSA moves away from the principle of caveat emptor at great peril. It risks creating the kind of moral hazard it wishes to avoid, where consumers feel they need take little or no responsibility for their own financial decisions.”
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Readers' comments (26)
Anonymous | 13 Nov 2009 11:45 am
this is one crazy article - love it
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Evan Owen | 13 Nov 2009 11:47 am
Dear Mr Wyles
It would be helpful if you tell the world what consumers want and need, then inform us how the lenders can provide it without the whole thing falling apart once again.
I'm sure the regulators would be more than happy if you came up with a solution that would benefit society without a repeat of recent events. As a consumer I for one would most certainly prefer anything other than rigid rules and regulations, as long as it is effective while being flexible.
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Danny Lovey | 13 Nov 2009 11:48 am
I am in shock! I am in agreement with Matthew.
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Anonymous | 13 Nov 2009 11:51 am
Its amazing yet again to hear how wrong the FSA can be about something and are, yet again, barking up the wrong tree.
The FSA should concentrate on all the lenders who lent recklessly on loans and credit cards and allowed clients to dig themselves into a huge hole. Why did they do this? To hit their targets and earn nice bonuses and keep management off their backs. Its the brokers and mortgage lenders ( AKA Drug Dealers) who then tried to bail the clients out of the mess they were in as this for most was the best and only real way out of the mess they where in was to use the equity in their homes. At least these applications were underwritten and checked over which is more than I can say for 100's £Millions of unsecured credit that was dished out by the BANKS on a totally reckless basis! A 2 minute check on any credit system would have seen that most of the clients couldnt already afford what they had let alone borrow more unsecured debt.
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Mr Angry | 13 Nov 2009 11:58 am
No surprise there, I was unfortunate enough to experience working with the regulators and government at first hand. I experienced their attitude towards the financial services industry years ago, I must admit I became very cynical by the treatment I experienced. This feeds back to the RDR and making our industry more professional. What is the point of more exams to achieve professional status when the governing bodies see the industry as the drug dealers at the school gates. This attitude is from the people claiming champagne and string quartets on the lawns of £200 per night venues hosting 2/300 so called government experts on how to combat and limit the effects of the recession and prevent people losing their homes and livelyhoods. Usually for a week at a time. We could start by re directing the funds from these leaches of society to the needed areas.
Still wanting to get on the gravy train...!
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Anonymous | 13 Nov 2009 12:06 pm
Why is it 'never my fault Gov'. It is about time that we realise that these issues were collective, in some cases lenders were at fault, in others clients and yes, sometimes advisers. I am not suggesting that the FSA is without fault, but we should at least be realistic!
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Tom IFA | 13 Nov 2009 12:09 pm
Come on we IFA's are treated far worse than a convicted drug dealer and their family(s).If I loose my job in 2012 for simply not having exam technique after decades of honest service to the community will I and my family be provided with accomodation, paid cash benefits and unlimited access to training in new skills?
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Mike Winfield | 13 Nov 2009 12:13 pm
The FSA should do its job and clean up the mortgage market.
To start with they can explain why so many Asian fraudsters are able to get authorized as mortgage brokers, for it appears a disproportionate number end up getting throw out.
Are standards being lowered to allow such people in and avoid the attention of the Race Relations people.
Or is it simly they are easier to catch, ther upon showing what a wonderful job the FSA is doing.
Mr Wyles, comments are justied
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Tracy Kavanagh | 13 Nov 2009 12:16 pm
This is so true. I could have written the article myself. We are in a nanny state!
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Anonymous | 13 Nov 2009 12:16 pm
Its funny how when the banks were lending and making billions in profits - brokers were their best friends. Now its turned sour - they exclude us, dual price, and make a mockery of the distribution power we have and the amount of business they gained from us.
I sincerely hope that the banks realise their shortcomings.
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