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Richard Fox: Delays suggest mortgage broker register not a priority

Richard Fox

Despite the FSA saying the establishment of a register of mortgage advisors was a key element in its efforts to track and take action against rogue operators, we are now told that the IT difficulties of establishing the necessary database and that its introduction will be postponed.

The CF31 proposals would have identified individuals involved in the customer-facing functions of the mortgage market and require them to be ‘fit and proper’ and hold them personally responsible for their actions.

More importantly, it would have resulted in the creation of a register of all such individuals, enabling them to be tracked if they move firms.

This has long been recognised as an essential tool to clamp down on mortgage fraud so it is of critical importance to the entire mortgage market, not least the consumers.

The FSA states its reason for further delay to this critical piece of consumer protection is the need to prioritise work on their information technology system, but this could surely be overcome if there is sufficient desire to complete the project.

Consumers have until 7 December to indicate to the FSA whether they believe they have the right priorities and can send their views by email to

Meanwhile, the political parties have been holding their annual conferences. All of the major parties acknowledged that there is a need to provide more housing – particularly stock that is affordable and social in nature.

No one who looks at the statistics can deny the need exists but our leaders are not able to specify what price might be deemed ‘affordable’ nor how the costs of developing housing for those in social need might be met.

As always, these numbers will be reflective of the location, and it is clear that the minimum cost of new developments in the south-east still remains beyond the reach of many potential young buyers on average wages.

There are two possible solutions in the longer term.

If it were possible to greatly increase the supply of new housing then the upward pressure on prices would reduce, making property in the south-east more affordable over time.

Alternatively, greater economic growth outside the south-east might lessen the population pressures that currently exist in this region and drive property prices upward. However, either solution still brings with it the difficulties of funding developments and buyers’ needs.

It is generally agreed that consumers would benefit from there being greater competition between lenders and much has been made of the influence of new lenders.

The recent announcement that ING Direct is to withdraw from the UK market is indicative of how difficult it is to build a viable business even when the offering proved attractive to a great many consumers.

Basically a bank needs to attract deposits and make loans at a price that covers all the costs of collecting the funds. ING is not the first internet bank that has found this balancing act difficult to achieve and its experience might deter others from considering such a venture.

While more competition is often beneficial the number of lenders already active in the UK should be sufficient to provide a healthy market and there is evidently already healthy competition for those customers who meet the rather restricted criteria that lenders now apply.

Providing access to funding for those who do not meet these tight criteria is the problem and this will not be resolved merely by greater competition. It is largely restricted by the capital required, particularly to support loans where the borrower cannot provide the required level of equity or deposit.

This requirement is being driven by the level of capital that lenders are required to hold, which begs the question is this essential or is it something of a knee-jerk reaction to previous regulatory failure?

Richard Foxis chief executive of the Society of Mortgage Professionals


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