Lloyds Banking Group says it is disappointed the FSA decided to delay the introduction of its new approved persons regime despite the extra pressure it would have put on lenders.
In December, Money Marketing revealed the FSA was delaying the implementation of the approved persons regime from the planned March 2011 start date until 2012/13.
The regime requires anyone who advises or sell mortgages to prove they are “fit and proper” and to register with the FSA and many lenders were worried about the effect of the new regime on their sales staff.
The Council of Mortgage Lenders welcomed the delay but advisers felt the FSA was being soft on lenders offering tied advice.
Lloyds sales director of mortgages Mike Jones says he is a keen supporter of the approved persons regime and is unhappy about the delay.
He says: “The approved persons regime is very sensible and it is a shame it has been delayed. It would be a very good thing to bring to the market.”
Jones concedes the introduction of the regime will come at a cost to the banks, specifically because more qualified people will bump up salaries.
He says: “The moot point is the extent to which turnover in the industry would rise as a consequence. Salaries would rise. The pool of qualified people is potentially less than the number of people needed by the industry. That is the most likely avenue for increased cost.”
Jones believes the mortgage market has now “right-sized” itself after the excesses of the pre-crisis period.
Council of Mortgage Lenders’ statistics show 2010 gross lending reached around £135bn compared with £362bn in 2007 but Jones says the market is in a strong position for growth.
He says: “We have put things back on an even keel and I think the market is in a relatively strong place to take advantage of the opportunities and growth that arises.” But he adds that things will not start to improve significantly until 2012.
He says: “Optimism about how things would start to improve in 2011 was rather dashed on the news of the Bud- get and the tax rises and people realised how difficult it was going to be to operate, not just in mortgages but the UK economy.”
In September, his predecessor, Nigel Stockton, suggested the share of Lloyds’ lending from brokers could fall to nearly 50 per cent of its overall lending. But last month, Jones told Money Marketing that Lloyds does not intend to boost the amount of business it receives through its branch network from its current level of 40 per cent of total business.
He says: “I have seen speculation about what we are going to do in 2011, well the answer is it is a bit less than 60 per cent for intermediaries and a bit more than 40 per cent direct. But it does not meet in the middle. It is a question of emphasis, not a question of strategic change. A big part of that is the UK market.”
Jones stresses the need for the FSA to ensure its new regulations over affordability are right for the industry and consumer. He says: “Some of the things like affordability are hugely important to get exactly right and it is appropriate as an industry that we are doing a big rethink as to what that looks like.”