FSA intervenes on mortgages arrears
For article see http://news.bbc.co.uk/1/hi/business/8480073.stm. Reading between the lines the FSA has made it clear that its rules on lender's behaviour around mortgage arrears are not fit for purpose. One must ask what the FSA has been doing since its intervention into the Mortgage market.
Given the failure of regulators in general, but the FSA in particular, to foresee events over the last 2 years and either to prevent or reduce the impact of unnecessary risk taking, this latest admission must be seen as a final straw in the FSA's ability to create a proper regulatory environment in which to transact mortgage business. With an impending election it is unlikely that this requirement to regulate on the FSA will be changed but it is likely that the FSA will be challenged post-election to demonstrate that it adds value. Whether this is possible is a matter of how they respond to the concerns in the mortgage market. Based on past record one must question whether this will happen.
Lender's like any other business have to ensure that they are profitable, whilst balancing with issues such as reputation and their regulatory requirements. Working with the principles of Treating Customer Fairly has always been difficult because of their vagueness. On the other hand, because of the lack of flexibility, black letter rules can fail to provide effective rules in individual circumstances.
Where next? A full re-write of the Mortgage: Conduct of Business together with the associated cost to lenders? The market already reeling from the failure of appropriate regulation to then be hit by tighter rules reducing the ability for lenders to assist the economy in recovery.
We suggest that before making knee-jerk statements of the kind released today a full consultation is carried out, with lenders and consumer bodies, that ensures that the rules produced create a market where risk levels are acceptable, find the right balance between the lender's commercial needs and the borrowers rights, and appropriate sanctions against lenders for non-compliance.
Given the failure of regulators in general, but the FSA in particular, to foresee events over the last 2 years and either to prevent or reduce the impact of unnecessary risk taking, this latest admission must be seen as a final straw in the FSA's ability to create a proper regulatory environment in which to transact mortgage business. With an impending election it is unlikely that this requirement to regulate on the FSA will be changed but it is likely that the FSA will be challenged post-election to demonstrate that it adds value. Whether this is possible is a matter of how they respond to the concerns in the mortgage market. Based on past record one must question whether this will happen.
Lender's like any other business have to ensure that they are profitable, whilst balancing with issues such as reputation and their regulatory requirements. Working with the principles of Treating Customer Fairly has always been difficult because of their vagueness. On the other hand, because of the lack of flexibility, black letter rules can fail to provide effective rules in individual circumstances.
Where next? A full re-write of the Mortgage: Conduct of Business together with the associated cost to lenders? The market already reeling from the failure of appropriate regulation to then be hit by tighter rules reducing the ability for lenders to assist the economy in recovery.
We suggest that before making knee-jerk statements of the kind released today a full consultation is carried out, with lenders and consumer bodies, that ensures that the rules produced create a market where risk levels are acceptable, find the right balance between the lender's commercial needs and the borrowers rights, and appropriate sanctions against lenders for non-compliance.
Labels: arrears, fixed rate mortgages, treating customer fairly
posted by Brendan O'Brien at
09:21
|
0 Comments
