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Fear of mass lender exodus from code

The mortgage industry fears a mass exodus from the mortgage code after N3 as lender concerns over high costs and crippling compliance procedures continue to mount.

The Council of Mortgage Lenders has sent a letter – obtained by Money Marketing – to its members asking whether they will sign up to the mortgage code once statutory regulation starts in August next year.

If, as industry figures predict, many will not sign, those lenders will be forced out of membership of the CML as its constitution states that members must be signatories to the code.

Halifax, the UK&#39s biggest lender, says it expects many mortgage providers to tell the CML that they cannot cope with the extra costs and regulatory overlap which it believes a dual regime is likely to create.

Scottish Amicable national mortgage manager John Malone says the whole lending community will pull out of the voluntary regime, which would cut the Mortgage Code Compliance Board&#39s remit to just the intermediary sector.

He says: “I can see all len-ders pulling out of the mortgage code so they can be resp-onsible to only one regulator. The fact that the CML is sending out a letter to members suggests to me that it has been getting the same feedback.”

Mortgageforce managing director Rob Clifford says: “I am incredibly concerned that lenders will not participate on a voluntary basis in the future. Lenders provide teeth to the code and if they shift away there will need to be a new barrier to entry created.”

A CML spokesman says: “The purpose of the letter is to find out what lenders have to say about the future of the mortgage code.”

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