Mortgage market stakeholders are likely to see further changes in a number of areas as a result of the European Union’s Mortgage Credit Directive.
That was the view of Lynda Blackwell, Conduct Policy at the FSA, speaking at the Mortgage Business Expo yesterday.
At the session on the Mortgage Market Review (MMR) and the recently published final rules, Blackwell outlined a number of areas where no changes have been made in anticipation of the Directive. These included the Key Facts Illustration (KFI) and the rules around financial promotions which are likely to change because of the Directive.
Blackwell stressed that the FSA was “pretty happy that the MMR is aligned with the Directive” but anticipates a number of areas would be “impacted”.
In outlining some of the major changes that the MMR will bring, Blackwell said the regulator “expect brokers to play a very strong role in the market” and that advice was central to the rules. She did however acknowledge the concern many in the market have around mortgages completed on an execution-only basis.
Blackwell said: “We do have concerns about the execution-only sales channel and we were hesitant to provide it. Firms cannot encourage customers to opt-out of advice.”
On the issue of individual registration of mortgage advisers which has been put back until the Financial Conduct Authority is established, Blackwell acknowledged this was “the elephant in the room”.
She said: “We remain committed to the approved persons regime and it will come in after the FCA is up and running. We do want to work constructively with the market to get an interim solution and we are getting together with all trade bodies to discuss this later in the month.”
Blackwell also disagreed with the view that it is the FSA and regulation which are responsible for lenders not lending suggesting it is current market conditions that are impacting most heavily.
She said: “The FSA is not responsible for lenders rejecting applications. The MMR does not stop higher-risk lending; what matters to us is that the customer can afford the mortgage. We are not being prescriptive; we are not imposing restrictions on lending. We want to see the better practices that exist today continue into the future.”
