The mortgage market review is not a “knee-jerk reaction” to the financial crisis, says FSA director of conduct policy Sheila Nicoll.
Speaking at a round table hosted by thinktank the Centre for the Study of Financial Innovation last week , Nicoll said the FSA has always been comm-itted to reviewing the mortgage rules that were introduced on M-Day in 2004. However, she said ignoring the failings exposed through the credit crisis “is not an option”.
She said: “There has been a huge amount of policy analysis in what we are doing and I would just stress that this is not a knee-jerk reaction to the crisis. Our thinking dates back to the early days of mortgage regulation. We are committed to reviewing the rules in place since 2004.
“The review we are undertaking is an accumulation of knowledge, understanding, analysis and supervision in that market. Problems in the market have been clearly highlighted by the events of recent years.
“Let’s all agree, looking the other way in the present circumstances is not an option.”
Nicoll said the FSA is willing to be flexible regarding the proposals, which have been widely criticised by the mortgage industry.
She said: “We are taking account of comments and if there are aspects of the rules that do not fit, we will listen to those and, where appropriate, we will be flexible, recognising that there is a need for flexibility in the market.”
Nicoll said that the current proposals as set out in the MMR are not aimed at shutting people out of the market but at ensuring they can afford their mortgage.
She said: “We are not necessarily saying they are not going to be able to borrow – they may just not be able to borrow quite as much as they had hoped.
“I do not think what we are proposing is rocket science. A lot of what we are proposing exists within firms.”