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AMI calls for probe into cost of loan regulation

The Association of Mortgage Intermediaries has pitched into the debate on the cost of mortgage regulation, demanding that the FSA carries out a thorough assessment of the regulatory impact on the market.

Director Chris Cummings makes his comments in a Council of Mortgage Lenders’ report which puts the one- off cost of mortgage regulation at well over double the FSA’s original estimates.

Before statutory regulation came in, the FSA estimated that one-off set-up costs would total 136m, of which 83m would be felt by lenders alone.

The AMI argues that even the CML’s estimate is not accurate as it predominantly looks at the effect on lenders rather than the entire industry. The FSA says it will continue to use the figures it first calculated and has no plans to reinvestigate these yet.

The CML says the soaring transitional costs raise the question of whether they are in proportion to the benefits of regulation and the FSA should scrutinise whether or not the consumer is better off under the new regime.

Cummings says: “When the regulator introduces a new programme – be it TCF, depolarisation or mortgage regulation – it should publish up front success criteria.

“At a given point, it should make an evaluation of costs and benefits to make the market look like it is accoun-table, otherwise firms will get the feeling that this is a one-way street.”

CML senior policy adviser Kate Davies says: “For the FSA, this must all seem academic now and water under the bridge. Now the industry has a lot more to look forward to – Basel Two, Hips, the European Credit Directive – which we did warn the FSA about.”

FSA head of mortgages and credit unions Andy Watson says: “We are still using the statistics we had last year and these are not being reviewed and we have no plans to do so.”


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