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‘Regulation is pushing products off the shelf’

Mortgage regulation has done a disservice to consumers by restricting innovation and leading to the withdrawal of some mortgage products, says new Building Societies Association chairman and Nationwide chief executive Philip Williamson.

Speaking at the BSA Conference in Harrogate last week, Williamson said Nationwide has been forced to withdraw some of its mortgage products as they were no longer viable under the new mortgage regime and the treating customers fairly initiative.

Products lost include the society’s one-minute mortgage, offering an online decision in principle within 60 seconds, while take-away mortgages with mortgage applications in a bag are no longer tolerated under the new regime.

Williamson is concerned that a Nationwide mortgage interview now takes about two hours – half an hour longer than before M-Day – an experience shared by other lenders.

As a result, customers are more prone to apathy, he said. Innovation is being stifled as regulation is hitting the bottom line of building societies and other lenders and he said this would restrict new product development. “There are a lot of products that we simply cannot do any more because of regulation,” said Williamson. “Customers have been disadvantaged because we are no longer able to provide some products while the creation of new products is taking much longer.”

Williamson called on the FSA to allow more practitioners to join in thinktanks so processes can be proved to be viable before imposing them on the mortgage industry.

He wants the regulator to pare down some rules and to shorten key facts illustrations. KFIs continue to be the main bugbear for Williamson, varying from between four to 14 pages. He urged the FSA to create a template for all lend- ers to use.

Williamson said: “The FSA should have said in the first place, here is a template of a KFI, this is what a customer needs to see and here it is in x number of pages but they did not do it. If we have regulation, you need to go all the way. We need absolute clarity, explicit interpretations and a level playing field.”

With the continuing effects of mortgage regulation and a slowing economy, Nationwide, like others, will do less business this year and will not be looking at significant growth.

Williamson said mortgage regulation would continue to be the major topic as the industry is still coming to terms with the regime. He said: “Anyone can lend money but getting it back can be difficult. Growth is not always the be all and end all of success. The problem with mortgage regula- tion is that it has become more difficult for customers to get information easily. The customer is being disadvantaged.”


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