Speaking at a fringe event at the Labour Party annual conference in Manchester this week, Andrew Miller, MP, said that although it went against his own instincts, the Government should consider introducing new regulations to ban certain lending practices.
He said: “In the past, mortgage lenders would not lend you more than two or three times your salary but there are lots of people now with six or seven times. These are ludicrous figures. If the industry cannot act in a respons- ible way then, yes, the state should step in.”
Miller used the lending practices of defunct Morgan Stanley lender Advantage as an example.
The MP for Ellesmere Port & Neston said: “Some of the extreme practices on mortgage selling recently have been so irresponsible. One hundred people lost their jobs in a company called Advantage in the UK. On the face of it, it is a reputable bank but the practices of Advantage in my own constituency included selling people mortgages that they clearly could not afford.”
New FSA chairman Lord Turner has stated that banks offering inflated bonuses to staff may have to hold more capital due to the increased risk of their business model.