The BSA has called on the government to step in urgently to debate the future of the mortgage market.
In its response to the FSA's responsible lending consultation, the BSA argues it is not the role of the FSA to implement rules that could profoundly affect such a major part of the economy as housing.
Paul Broadhead, head of mortgage policy at the BSA, says: "It is for the government to provide a clear plan of their housing policy objectives. It will then be imperative to assess whether regulatory proposals facilitate the desired outcomes for UK consumers or present further obstruction."
He added: "It is not the role of appointed regulatory officials to determine the shape of such a major part of the UK economy, nor is it their role to attempt to control demand through prescriptive and restrictive conduct of business rules.
"This is the role of elected representatives and we would urge the government to make this debate a priority."
In addition, the Mortgage Market Review proposals on responsible lending could heavily impact upon competition and diversity within the mortgage market at the expense of Mutuals, Broadhead says.
"Mutual lenders have a good track record of responsible lending but many of the proposals are a one-size-fits-all approach, which attempt to shoehorn mutuals into large bank processes."
"Competition and diversity are of vital importance to ensure a sustainable and vibrant market, which offers choice for consumers. A market dominated by a small number of large banks is not desirable in the long term and does not meet the FSA objectives of a sustainable and flexible market," Broadhead adds.
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BSA and its aspirations
Congratulations to the BSA for attempting to put the regulator in its place. The unfortunate issue here though is that the regulator represents the government in its capacity as regulator of UK financial services! What is missing, in my opinion, is leadership from the political class about what they want from the UK financial services market and in particular, mortgages. Our regulator has at its heart a functional, safe mortgage market where no one gets hurt and 80% of the market is provided by five banks. To that end, the FSA, must control all parties and with that control comes a driving out of competion. Their position continues to stifle business innovation and limit consumer choice a bi-product they appear unwilling to accept. Take a look at the utility providers and rail services. They are mammoths and regulation has concentrated control to a small point that their respective regulators can control (??). Well 'control' might be pushing the point a bit; but look at the increases proposed to rail fares without a corresponding improvement in service and you will see the effects of a lack of competition. Sadly, the writing is on the wall for this country's small and medium sized mortgage service business. Control is heading further into the hands of just a handful of banks. The regulator represents an ideology that is more suited to the previous government. If this coalition government does anything worthwhile for business it will be to limit the power and influence of the biggest banks and spread risk of failure to more successful mutuals. So government do 2 things and mae a statment of intent, 1) give a clear lead that decisions on finance are the collective responsibility of lender, broker and CUSTOMER and 2) place more emphasis on improving liquidity outside of the big 5 - all parties then might make progress and leave the consumer to enjoy more choice.
Posted by: Chris Ridgeway
FSA was Gordon Brown's worst mistake!
How on earth could any person in his right mind leave the regulation of the major part on the United Kingdom's economy to bunch of ego maniac financial illiterates at the FSA? What has happened to the Nation that invented Banking, Money, Commerce, Insurance, and above all produced the father of market economy "Adam Smith"? Is there any wonder we lost all our Empire..... If the FSA is the institution teaching some of the brightest mind in UK about competence, integrity, and other buzz word they pick up from Bloomberg. Wake up Britain, and take back control of your economy.
Posted by: Cjay
BSA v FSA
I am pleased to see that another organisation has woken up to what the big banks are up to via the FSA, who's senior positions are mostly occupied by ex or seconded bank people. They have their feet on the jugular of our financial system and almost control everything we do. I will shortly be writing to me local Conservative MP to request her to participate in the forthcoming RDR debate in parliament or advise why she won't, but I do not hold out much hope of her speaking up in defence of the IFA community when I look at her CV and see that she worked for Barclays for about 20 years.
Posted by: John Smyth
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Interesting...
... to see that major national institutions are now waking up to the unreal ambitions of the FSA's power-mad management. I wonder when the FSA will declare "We have no further territorial demands"? I bet they're already putting the Canary Wharfe bunker construction out to tender.
Posted by: Neil F Liversidge