The Financial Services Consumer Panel has clashed with the mortgage
industry for claiming that new FSA rules will stamp out “faulty and
downright biased” loan advice.
Speaking at last week's Council of Mortgage Lenders regulation conference
in Birmingham, panel chairman Colin Brown said FSA proposals would help
borrowers detect advice skewed by commission bias.
He said the panel was pleased the FSA was heeding its advice and charging
lenders with the responsibility of ensuring borrowers get the right product
information before taking out a loan.
But his views have angered the mortgage market, which has accused Brown of
scaremongering and encouraging the FSA to ignore industry fears over the
impact of the proposals.
Pretty Technical Partnership partner Kim North has slammed Brown for
bandying around unproven accusations of widespread bad advice and is
calling on him to produce evidence to support his remarks.
The CML says it has “significant reservations” over Brown's championing of
regulation which it believes will squeeze smaller brokers out of the
mortgage market. It says consumers will be left with less choice and
greater costs as lenders are forced to slash the number of intermediaries
through which they sell their products.
The FSA admits it has had strong objections from the industry over its
proposals but has cited the views of the consumer panel as the driving
force behind its decision to press ahead with the regulation.
Scottish Amicable national mortgage manager John Malone says: “I am very
disappointed. The influence the panel has had in the FSA's thinking will
only serve to add to the paper chase already experienced in the market and
raise costs for lenders, intermediaries and consumers.”