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Housing minister slams FSA’s MMR


Housing minister Grant Shapps has hit out at the FSA’s Mortgage Market Review, branding it a “step too far”.

Speaking at the National House-building Council’s annual lunch yesterday, Shapps said the problem with the mortgage market was a lack of regulation of the way banks had operated.

He said: “I’m absolutely clear about this. I think it was at the moment that I realised I wouldn’t have a mortgage if the MMR changes went through that I thought this might be going a step too far. There is no point in closing the door after the horse has bolted.

“The problem with the mortgage market wasn’t some pernickity issue to do with the FSA or anybody else, talking about whether you can lend X or Y percentage or what form you had to get the end user to sign, it was because there was a lack of central regulation on the way the banks were operating.

“What we need is top level central regulation and not pernickity down on the dirt regulation and what you can and can’t do as a mortgage company.

“I hope the FSA will be getting that message. They are independent and are of course free to go off and do this work but I think it is important we learn from the lessons of the past without repeating them which is what I think they are in danger of doing.”

The FSA would not comment on Shapps’ views regarding the MMR. An FSA spokeswoman says: “We have outlined why we are conducting a review of the mortgage market and have already said that we are not rushing into anything and will be carrying out a full economic  analysis on the impact of any proposed changes before we issue any final rules.”


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There are 27 comments at the moment, we would love to hear your opinion too.

  1. It is pleasing to see that Grant Shapps understands the MMR and its ramifications and over kill even if Mark Hoban does not!

  2. Is somebody now going to start talking sense

    Why has nobody ever come out with the fact that what killed the mortgage mortgage market was the lack of regulation on buy to lets which falsely stoked up the housing market

    You only have to look at the lenders that got in trouble to see this

  3. Let there be light : and there was light.

  4. Perhaps the FSA should have taken the same stance with RDR as they state they are taking with MMR. They might not have totally wrecked our wrecked our industry and had these costs added on to the charges of products for consumers now who are paying so much more for advice now than they did before RDR had been dreamed up in Canary Wharf.

  5. at last an MP talking sence!

  6. The FSA are becoming the new Health & Safety Executive. They were fine in the beggining, but eventually ran out of good ideas and now come up with all sorts of weird and wonderful one’s to justify there existence. Have you seen the one about how to climb a ladder, what a load of tosh!!!!!!

  7. What a shame we have not got ministers looking at RDR in the same light.

    Banks flogging anything to everyone for commission. They budget part of the commission receipts for the misselling fines and compensation claims they know they will get .
    Yet we get rules that will hit the small independant advisers the most and will have little impact upon the banks.

    Why are not rule just put in place to more closely monitor the banks or just stop them selling products.

    You will get rid of 80% plus of all misselling and bad advice in one go.

  8. Here we go again! Another Minister going “native” as soon as a difficult issue raises its head. The mortgage market failed – a responsibility shared by the industry and consumers. We must have changes so that “liar loans” and ridiculous LTV’s never harm the market again. The only people who fear the MMR are those who weren’t doing a professional, risk-based job in the first place.

  9. It is a matter of record that the UK mortgage market did not fail on its own. There was a breakdown in world banking caused by a totally laissez faire attitude in the US. This meant that UK lenders could not obtain the funding they might reasonably have expected to have available.

    The acid test: the number of reposessions in UK is still ruinning well below the peaks of the last recession.

    The FSA is indeed trying solve a problem that only exsts at the very margins by breaking a system that otherwise works reasonably well.

    The minister is to be congratulated…

  10. well done Mr Shapps. Never thought I’d agree with an MP, so good to see someone taking note of the failings of the FSA

  11. CP10/16 was the problem, it has quite rightly been roundly criticised for attempting to get into too much minutiae and frankly parts of it made little, or no sense at all. We have long argued that once elected officials realised that the outcome of MMR as laid out in CP10/16 would be to stop perfectly sensible constituents; in this case Mr Shapps himself from obtaining even their current mortgage, the cat would be out of the bag. In fairness to FSA CP10/28 is thought through far better and has not fallen into the same traps as the previous paper. For everyone’s sakes, not least of all the normal man in the street let’s hope that common sense prevails as we move forwards. With a government minister saying stuff like this I am sure FSA will sit up and listen – this is not just the industry saying you are going too far, it is now branching out far wider than that.

  12. Green Eyed Monster 26th November 2010 at 12:34 pm

    Suggested question for Grant Shapps to ask at Prime Minister’s question time:

    As several MPs are admitting that the FSA does not answer to parliament and appears to be above the law of the land, answerable to no body, does the Prime Minister agree with me that the new regulatory body should be subject to the rule of law, and answerable to parliament?

  13. Most small business in this country (which are the majority employers) were started on the back of someone mortgageing their home and risking everything to get started. The banks are not lending comercial money to start up situations. The FSA MMR can only be disasterous for the1000’s of entreprenures who will be needed to mop up all the unemployed public sector workers. Perhaps this penny has dropped!!!

  14. Anonous @12.03 What utter tosh

    “Lack of regulation on buy to lets stoked up the mortgage market…”

    Let’s be clear BTL’s were generally based on 75% LTV maximum and 125% rental value coverage. Net result my BTLs are showing me a handsome monthly profit in income terms, and I am still ahead in capital terms. Meanwhile I have 100% occupancy for this year and last.

    Many people need private rental property cause
    they can’t get a deposit togther and they will need it even more if the idiocies of the MMR go through…

  15. Forgetting MMR, the content of a number of speeches and comments that have emerged recently, is very worrying indeed,
    It seems thanks to the FSMA 2000 that Individuals MP’s & Parliament have no power to stop the FSA. The comments all seem to be like the one above. Quote [They the FSA are independent and are of course free to go off and do this work]
    It is surely time to make those Individuals who create these situations personally responsible for their actions. No person is exempt from the law (are they)?

  16. Forgetting MMR, the content of a number of speeches and comments that have emerged recently, is very worrying indeed,
    It seems thanks to the FSMA 2000 that Individuals MP’s & Parliament have no power to stop the FSA. The comments all seem to be like the one above. [They are independent and are of course free to go off and do this work]
    It is surely time to make those Individuals who create these situations personally responsible for their actions. No person is exempt from the law (are they)?

  17. Agree with Simon Webster. It is not the British public that are responsible for the mess. Do the maths. Assume that house prices fell by 25% and 1% of customers defaulted and ended up in repossession. Assuming all these defaulters started with 100% mortgages and hence showed 25% loses, the lenders would lose 0.25% of their mortgage book. Nothing to worry about.

    The problem was because because the banks lent money they didn’t have and then found that they couldn’t borrow any more to make THEIR repayments, not their customers.

    100%, self cert, BTL. NONE of these are responsible for the credit crunch. It is entirely down to the banks and their regulators.

  18. IN Glasgow – where i live and work I have seen starter flats, in good nick selling for £45k – not grubby flats in council blocks but decent flats in nice tenement buildings in the East End of the city.

    These same flats were selling for 65-70k 2/3 years ago. I wonder how much they will be going for if MMR kicks in and prices just about everybody and most FTB’s out of the market?

    £20k, £25k – the kick on from such a drop in price would travel all the way up the housing ladder and this is why it won;t get anywhere near being passed in it’s current form.

  19. Mr. Jogga Singh Teidy BA (Hons) RGN Cert.Ed DipWSm 26th November 2010 at 1:46 pm

    MMR…so not measles mumps and reubella!

    I thoughtthe problem was subprime marketlending…

    Whatever was the cause, it is that area the FSA needs to research and support…so as to make it ok for investors at all levels of the property market.

    As current lending demise, the Lenders need to open up and lend to those who largely in society are credit worthy,..and offer more LTV.

    No good shutting off…and making loans inaccessible to say FTB’s

  20. Subsitute Financial advice/market in Mr Shapps statement for mortgage advice/market and you have the RDR

    Come on Mr Shaps, have a word with your colleague Mark Hoban and or some other coleague and either you or one of thme say something similar about the RDR

    After all you have as much or as little influence over the FSA be it MMR or RDR. They are independent after all after previous governments not only delegated their powers to govern but actually gave them away

  21. The FSA’s going. What we need to concentrate on now is ensuring that the CPMA isn’t the same kind of unbridled monster able to trample roughshod over anyone or any body which dares to stand in its way.

  22. It is the calculation of affordability, based on a REPAYMENT mortgage, even for those wanting an interest-only mortgage, that is the main problem.

    If a 56 year-old government employee due a £100,000 pension lump sum wishes to align that to an interest-only mortgage over 8 or 9 years, for example, he/she is almost certain to fail affordability.

    Furthermore, it is wrong to say that it is still in consultation because the FSA is already dictating to lenders on the basis of their proposals. The MMR is already reality. It seems bizarre to call for the repeal of an incomplete set of rules, but that only shows how anti-democratic the FSA is.

  23. I cannot believe we actually have a Minister that understands MMR and its implications – FSA he’s got your number ……

  24. At last, someone with some power and influence (hopefully) that realises that the FSA hasn’t a clue on the real problems facing the mortgage market at this time. The same goes for RDR. The FSA tackles the wrong problems for the wrong reasons and leaves everybody else (including the consumers who they are supposed to be protecting) to pick up the pieces.

    And what is the reward for failure at the FSA – bonuses, golden hellos when senior staff move on, new year gongs………you couldn’t make it up !

  25. The Housing Minister must be congratulated in hitting out at the FSAs Mortgage Market Review

    Over regulation has not stopped this country from falling into recession.What we need are clear signals coming out from Goverment on how we in this industry can go forward.This statement by Mr Scapps is a major step in the right direction.

  26. The Rt. Hon. Paul Murphy, MP 27th November 2010 at 10:33 am

    Thank you for your email reply to my concerns regarding MMR regulation. Your email dated 29/10/2010.

    I am attaching an article from Grant Shapps, the Housing Minister. Many of your constituents will not be able to qualify for a mortgage if the FSA presses ahead with this regulation.

    Best regards,

    Duncan Hocking
    Available Mortgages Ltd

  27. Ancient a mortgage broker in N3 29th November 2010 at 9:06 am

    Mr Shapps – I take my hat off to you, you hit the nail on head – the problem was with the lenders, not advisers or consumers, and now its us that suffer.

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