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‘FSA loan rules will crack in a crunch’

The FSA’s proposals for a new regulatory structure in the mortgage market are “timid” and unlikely to withstand future housing crises, according to thinktank Long Finance.

Its report, Time to Stop Betting the House, slams the FSA for failing to take account of interest rates, price volatility or vol-atility in the broader economy in the mortgage market review.

Author David Steven, who is the co-editor of risk and international affairs website Global Dashboard, says the FSA has also failed to use stress tests and consider worst-case scenarios.

He says the FSA’s reforms are designed with the last hou-sing bust in mind and may not hold up when future risk fact-ors emerge.

Steven says: “Far from presenting opinions for ’radical change’, the FSA’s analysis is partial and its recommendations timid. The new regulatory structures are unlikely to prove robust in future housing crises. The FSA is quick to lecture others on the use of stress tests and the need to consider worst-case scenarios, yet perplexingly it fails to follow its own prescription.”

Steven is calling on the FSA to develop indicators for the resil-ience of the mortgage market which will provide an early warning system for rising levels of risk.

He also wants the regulator to only implement an interim package of measures from the MMR while sponsoring a “much broader and far-ranging debate on the future of the market”.

Steven says that after the general election, the Government should appoint a Royal Commission, independent of industry and regulatory interests, to ask fundamental questions about the market.

He says: “It is clear that the MMR does not offer a viable roadmap for reform.”


Ex-Personal Touch chief Wilson backs lead generator

Former Personal Touch Financial Services chairman Martin Wilson is backing a new protection lead-generation company with his wife Amanda. The Consumer and Data Cleansing Centre will specialise in protection leads. It also offers client management and servicing. The firm is owned by an IFA. Amanda Wilson says: “The Consumer and Data Cleansing Centre is the […]

Bonds going bust? Not so fast….

In recent months bond bears have been reinvigorated, and market commentary suggesting “the end of the bond (bull) market is near” has become commonplace. We think these comments are premature. Explaining the global government bond sell-off October has seen renewed pressure on global government bonds, initially provoked by a Bloomberg article suggesting that the ECB […]


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