FSA Responsible Lending Proposals

Tightening of regulation was inevitable given the financial turmoil that followed the global economic downturn which exposed the flaws in the UK mortgage market. Clear regulatory guidelines are welcomed by lenders and consumers, but need to be proportionate. The FSA’s latest proposals are well intentioned, but may lead to a paralysis of the mortgage market, protecting the minority to the detriment of the majority. Such paralysis could reverse the promotion of homeownership, leading to homeowners being unable to move or to remortgage.

There is a concern that the FSA’s latest proposals are not proportionate. Moreover, the Industry itself has already done much to put its house in order and to ensure responsible lending. Self certification and interest only facilities have assisted many customers onto the housing ladder or to keep their homes. The majority used self certification for speed and convenience, to assist them through temporary financial difficulty, to repair their credit rating and return to the ‘high street’ or through necessity but not as a means to inflate income.

Regulation should protect the vulnerable while allowing the majority informed freedom of choice and the right to make their own decisions. In a recovering market where there are already limited choices and products, we do not want to regulate the market to the point where lenders may leave, leaving consumers with limited or even no choices.