Phil Whitehouse, head of The Mortgage Alliance (TMA), looks at latest FSA developments – and isn’t laughing
Of course I’m not old enough to remember That Was The Week That Was but the name of this particular 1960s’ TV show certainly sprang to mind when I was trying to get my head around all the recent FSA related announcements.
That Was The Week That Was is said to have broken new grounds in lampooning the establishment. The show seemed unafraid of anything or anyone. Every hypocrisy was highlighted and each contradiction was held up for sardonic inspection with no target deemed out of bounds. Royalty was reviewed by republicans rival religions were subjected to no-nonsense ‘consumer reports’ pompous priests were symbolically defrocked corrupt businessmen, closet bigots and chronic plagiarists were exposed and topical ideologies were treated to savage critiques. What it would have made of the FSA is anyone’s guess but I’m sure there are many intermediaries out there who wouldn’t mind hearing.
It has been a busy old time for the FSA and the latest news across the intermediary market bows is the announcement that the regulation of secured loans is being transferred from the Office of Fair Trading to the FSA.
The government says the transfer of regulation will establish a single regulator for all residential mortgage lending with consistent standards of consumer protection, and ensure second-charge lenders meet the FSA’s prudential standards. This announcement comes as no surprise and it’s fair to say that second charge lenders have been waiting for some time as to how and when they will come under the FSA regulatory umbrella but as with most FSA initiatives it is the timescale of the implication that will be the important factor. Let’s hope it is a sensible one for all concerned.
The FSA has also recently published a Product Innovation discussion paper to open a public debate about how the FSA, and in future the proposed Consumer Protection and Markets Authority (CPMA), should pursue the objective of consumer protection and specifically the issue of product intervention.
As part of its new consumer protection strategy introduced last year, the FSA says that it has already introduced a more interventionist approach with the aim of anticipating consumer detriment where possible and stopping it before it occurs. This approach aims to reduce consumer detriment by dealing with problems earlier, scrutinising the whole of the product lifecycle from start to finish rather than just focusing on the point-of-sale.
The paper outlines how the FSA has already begun to make a significant shift towards a more interventionist approach with tighter supervision of the governance of product development. But it also sets out a range of future interventions that could be introduced in areas where the potential for customer harm is greatest. These might include interventions such as banning products or prohibiting the sale of certain products to specific groups of customers.
Highlighted within this discussion paper is the FSA’s proposal for a cap on the interest rates that lenders can charge for credit-impaired mortgages but in the same breath the regulator admits this is difficult to get right. It also proposes capping the amount lenders could charge those in mortgage arrears.
Such price capping appears, on the surface at least, to be a sensible way to stop consumer exploitation but as one comment I saw on this subject said: “Stable door
