The Council of Mortgage Lenders (CML) chairman Martijn Van der Heijden has called for the mortgage industry to pull together.
In his speech to over 600 guests at the CML annual lunch, he said the £1.2 trillion UK mortgage lending industry also needed to focus on quality and innovate for the good of customers and the long-term health of the UK housing market.
He said: “I think we have to get more honest, more transparent, more intelligible, to our customers… We need to be clear about what we provide and how we provide it. More importantly, we need to make a true cultural shift from a sales culture, to a service culture.
“Somehow, after deregulation but before the credit crunch, mortgage lending sleepwalked into becoming a commoditised sales business rather than a true customer relationship business. It took the credit crunch to wake everyone up, and now we need to make sure we stay awake.”
He wanted against being ‘ultra-conservative’, however.
“What we shouldn’t do is build in a safety buffer on capital, a safety buffer on conduct, a safety buffer on market differentiation and end up with a small market of homogenous offerings,” he said. “There may be pressure from regulators to do so, but to throw away our diverse market place would be an eternal shame and won’t help society.”
Van der Heijden also told the industry that it needs to support regulators more actively when scrutiny is legitimate: “We should be braver about standing up for doing the right thing, and doing business in the right way… We should stand up for logic, by for instance making the obvious but strangely absent point that lenders only make money by lending – and therefore do want to lend… What we shouldn’t do is turn a blind eye.
“While we should defend our turf against regulatory excess, we should equally support efforts to identify areas where there are attempts to circumvent rules and allow poor lending to slip through the net.”
Emphasising the importance of innovation, he said: “We should continue to innovate for our customers and ensure that we don’t fall into the trap of hiding ourselves in the middle of the pack as a response to regulatory risk. Too often in the past, innovation was a euphemism for higher risk. That kind of innovation is not what I mean at all. What I mean by innovation is making it simpler for the customer, providing solutions where there aren’t any.
“Creativity and innovation can be a challenge for lending businesses operating in a cost-controlled environment. But necessity is the mother of invention, and we are the people who have to do this. Innovation won’t invent itself.”