Can this six point plan save the mortgage market?

A "well-functioning" mortgage market must bridge the gap between protecting vulnerable consumers and the availability of affordable mortgages, according to the Financial Services Consumer Panel.

"Reckless lending" from UK banks must be countered by stricter regulation, said the Panel, but the FSA needs to balance the two very different issues of affordability and consumer vulnerability.

FSCP chair, Adam Phillips, said: "The Panel is pleased at the FSA's plans for further consultation on the MMR. However, we are concerned that the public debate is too polarised between the need to protect vulnerable consumers and the need to ensure the widespread availability of affordable mortgages. A well functioning mortgage market must do both, as I hope the FSA will recognise."

The panel's six point plan sets out:

1. Effective regulation to help consumers to prevent irresponsible lending while not exempting millions of responsible borrowers. The FSA's policy needs to be based on a robust and comprehensive cost benefit analysis.

2. More joined up thinking connecting housing policy, the MMR and the wider social and economic implications.

3. Lenders must avoid being overly prescriptive on how they judge affordability and suitability for individual consumers with an intelligent, tailored assessment of potential risks, rather than having overly prescriptive rules which could be unfair to some consumers.

4. Transitional arrangements must be made for those with historic loans, which take account of the implications of the changes for all segments of the market.

5. Consumers are not prioritised. The Panel is concerned that the new Financial Policy Committee may not take adequate account of the consumer interest when making important decisions about the mortgage market.

6. Balanced debate which overcomes the polarised views on the mortgage market