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State of affairs in loan market

I read with interest your comments at a conference fringe meeting, reported in Money Marketing, to the effect that state intervention is needed to prevent excessive lending and the practice of “selling people mortgages that they clearly could not afford”.

I am sure you will be pleased to know that the state has in fact been intervening on this basis for the last four years. I refer you to:

  • The Financial Services and Markets Act (2000) creating the FSA.
  • The Regulated Activities (Amendment) Order 2003 SI 1475, by which the Treasury gave responsibility for regulated mortgage lending and related activities to the FSA from 2004.
  • FSA rules requiring lenders to take account of a “customer’s ability to repay” (MCOB 11.3.1 R) as well as maintaining a “responsible lending policy” (MCOB 11.3.4 R).

    In addition to these volumes of paper rules, you will be pleased to know that the FSA has a budget of £323m and a staff of 2,740 to enforce this.

    I trust this meets with your approval. Should you have any further queries relating to the conduct of financial regulation, you may wish to refer to the architect of the current regime.

    The address is: G Brown, 10 Downing Street, London SW1A 2AA. I hope this is helpful.

    Jonathan Purle

    Chartered financial planner & technical director,

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