The FSA has blamed delays in its authorisation process for new lenders on the fact that many applications are incomplete.
At the Mortgage Business Expo, FSA director of conduct policy Sheila Nicoll said she is aware there have been comments about the regulator making it too difficult for new lenders to enter the market, particularly when brokers are keen to see more competition.
She said: “How long it takes for us to review an application ultimately depends on the quality of the firm, as well as the type of business it wants to carry out. A new lender will take longer to authorise than a sole trader.
“A lot of the applications are incomplete when we receive them and remain so until our deadline six months later. This can be for a number of reasons, such as the firm’s systems still being in development or its board being incomplete.
“Without a full picture, we cannot undertake a complete assessment of the extent to which a firm will comply with our standards.”