Speaking at a Council of Mortgage Lenders conference today, FSA director of small firms and contact centre Lesley Titcomb outlined the regulator’s possible plans for its impending mortgage white paper in September.
Titcomb said: “One possible route for us to take is extending our approved persons regime to mortgage intermediaries. This could be a way of improving standards of fitness and propriety among individual mortgage advisers, prohibiting rogue individuals form the industry, and limiting the movement of problematic individuals through the industry.”
Titcomb also outlined the FSA’s other potential changes to MCOB. While she did not rule out product regulation through limiting loan to value and income multiples, she said the FSA could tend towards tackling more macro-level problems surrounding mortgage lending.
She said: “Our analysis points towards underlying issues in the mortgage market owing more to the unsustainable volume of high-risk lending and wholesale funding innovations than the simple availability of high-risk products. So it could be that key to a sustainable future market is reducing the underlying incentives and ability of lenders to supply risky credit.”
Titcomb also mentioned the possibility of putting sanctions on self-cert and fast-track mortgages. She said FSA analysis shows that self-certification borrowers take out larger loans in absolute terms than those using standard products and fall into arrears much more frequently.
She said: “Given that so many self certification mortgages have been sold, and so many of them are now in arrears, should there be more constraints on this type of lending?
“Or should we change our rules to require income verification for all mortgages – with lenders required to verify the plausibility and authenticity of the documentation provided by the customer before an offer is made?”