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CML accused of deflecting blame away from members

The Council of Mortgage Lenders has been criticised for appearing to absolve its own members of blame when it hit out at irresponsible mortgage lending practices.

At last week’s FSA mortgage sector conference, CML head of policy Jackie Bennett read a speech from director general Michael Coogan which said: “It is clear that a few lenders acted irresponsibly in their pricing, with a relaxation of credit standards or overreliance on the securitisation market.

“Those lenders are largely out of business as a result of their ill-judged commercial stance.”

But FSA chairman Lord Turner highlighted in his speech the fact that, of the 34 per cent of mortgages that the Bank of England classified as “specialist” last year, about half were lent by non-bank lenders such as GMAC and GE Money while the other half was lent by subsidiaries of high-street names such as HBOS, Nationwide, Abbey, Alliance & Leicester and many others .

Homefunding chief executive Tony Ward and Exact managing director Alan Cleary say lenders are deflecting blame away from themselves.

Ward argues that non-bank lending last year was even less than Lord Turner suggested.

Ward says: “Non-bank lenders had around £35bn of turnover in 2008, 10 per cent of overall lending, which is lower than Lord Turner’s estimate. Therefore, it is unfair that the non-bank sector has been labelled as a disproportionately risky sector. Non-banks have not received any Government bailouts and have not asked for any Government help.”

Exact managing director Alan Cleary says: “Most of the lenders of those specialist mortgages are still around as the vast bulk of specialist lending was done by balance-sheet lenders.

“This is a classic example of blaming someone else and blame will not get these problems solved. I do not concur with this ‘specialist lenders are to blame’ stance.”

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