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Pressing matters

We live in a world where the focus of media attention moves rapidly from one topic to the next. It is easy to become obsessed with whatever grabs the headlines at any moment.

When an issue disappears from the headlines, the public are left with the impression that the problem has gone away and requires no further action.

Seasoned media watchers know that behaviour patterns do not normally change rapidly and learn to filter out the hype surrounding news reporting and take a personal view as to whether a particular type of behaviour is becoming more or less prevalent.

Given the importance of the housing market and its clear link to the economic performance of the UK, along with the significant impact of house prices and mortgage rates on personal finances, it is not surprising that all aspects of housing finance can grab the headlines.

We have become accustomed to a regular diet of comment on house prices, regional variations, rate movements and investment opportunities. One of my own sources of amusement is how the statements of particular organisations are apparently massaged to put out the message most favourable to themselves.

An example of this could be found in commentary on house prices at the top end of the London market, which have performed incredibly well in recent months on the back of incomes and bonuses. This has somewhat masked more mediocre performance elsewhere.

Similarly, the buoyancy of the market overall has masked the rather dismal performance of some speculative developments in inner-city areas.

The message is clear. We should be careful to analyse the diet of news that we ingest to ensure that we get a clear and factual picture.

That said, there are examples where news stories on a subject continue to be highlighted over a period of some months. These may need to be given special consideration as they may well highlight an issue.

It has been somewhat disturbing to read of mortgages being sold to those who will not repay their loan before their planned retirement date. The FSA has commented on the risks of such lending and set out guidelines.

A case was highlighted recently where money was lent to a retired gentleman who was clearly in no position to meet the interest payments, let alone the repayments. Advisers have a responsibility to ensure that the issue of affordability is properly addressed and lenders must take steps to ensure the creditworthiness of their borrowers.

If these simple processes are followed, they will minimise the risk that a borrower will get themselves into difficulty and avoid damage to their own interests. All cases must be considered individually and there may be extenuating circumstances but the researchers were quickly able to uncover a new mortgage being granted to an applicant aged 102.

I am still of the view that these highlighted cases are very much the exception but any case is one too many.

The regulator seeks to move towards principles-based regulation. This will only work if all people in the industry are prepared to take personal responsibility, go beyond minimum compliance with the rules and ensure that the interests of their clients are at all times of paramount importance.

Richard Fox is chief executive of the Society of Mortgage Professionals.

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