Among the raft of changes, the regulator is to ban self-cert, regulate buy-to-let, individually register mortgage brokers and make lenders ultimately responsible for affordability assessments. Extending the approved persons’ regime to include mortgage brokers and arrangers makes sense and aligns the sector with the regulatory scrutiny that already faces IFAs.
Making it clear that lenders are ultimately responsible for assessing a consumer’s ability to pay is also a sensible measure which should bring clarity to the broker-lender relationship and ensure advisers are not blamed for lender failings.
The FSA was right not to impose specific restrictions on loan-to-value or loan-to-income ratios as blanket bans would have hit some borrowers unnecessarily hard.
The ban on self-cert is less welcome and appears to be a very blunt, expensive instrument to deal with borrower risk. Under the new affordability rules, lenders will already be anxious in dealing with such cases and surely it would have better for lenders to be allowed to offer such products on a case-by-case basis?
It was reassuring to hear the FSA will not be introducing level proc fees. There is no evidence that proc fees lead to consumer detriment. The FSA is also right to conclude that an RDR mortgage read-across is unwarranted and that there is no need to increase qualification levels in the sector.
Ensuring all mortgage brokers have to abide by the approved persons’ regime should be enough to improve professional standards.