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CML warns FSA rules pose threat to competition

The Council of Mortgage Len-ders has attacked the FSA, claiming it does not understand the mortgage market and warning that its proposals for regulation risk breaching competition rules.

CML senior policy adviser Kate Main says the FSA&#39s plans for the new mortgage regime are confused and ill-defined and she renewed her call for N3 to be put back from August 2002 to March 2003.

She said the industry was still waiting for clarification of the definition of the “reasonable steps” lenders must take to ensure intermediaries&#39 compliance, which was promised by the FSA two months ago.

Speaking at the Electronic Transactions conference in London last week, Main said: “Nice though the FSA are, they do not have industry experience and do not know how the mortgage market works.”

She said intermediaries face being subjected to the different monitoring requirements of the lenders they deal with and will need access to at least six data-sourcing systems to provide accurate pre-application illustrations.

In the CML&#39s quarterly journal, Main and director general Michael Coogan warn that the FSA&#39s monitoring requirements will create costly barriers of entry to lenders, which could break competition rules.

They accuse the FSA of restructuring the market through regulation as they believe there is a “real risk” that the monitoring burden heaped on intermediaries will force many to quit the market.

An FSA spokeswoman says: “We do not have a monopoly on knowledge. We know firms understand the business better than we do so we are asking them what steps will protect consumers.”

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