Consumer Panel work on the Mortgage Market Review
The FSA launched the Mortgage Market Review (MMR) with its October 2009 discussion paper. The review had the admirable aims of seeking to protect consumers, not only by ensuring the financial system was prudentially sound, but also by ensuring that firms conduct their mortgage business fairly.
The Panel devoted considerable time to the MMR.Â We also set out our vision of a mortgage market where consumers could shop around for affordable mortgage products that met their individual needs.
The Panel was supportive of the FSAâ€™s attempts to mitigate against irresponsible lending but critical of some of the key elements of the FSAâ€™s initial proposals. Â We were particularly concerned about â€˜mortgage prisonersâ€™ - consumers trapped in an existing mortgage agreement, perhaps because of a high loan-to-value mortgage, negative equity, inability to exit a fixed term deal or by the severe contraction of the interest-only market. We also said that the FSA should address the criticisms contained in the independent Peer Reviews of the welfare analysis, commissioned by the Panel, before coming to final policy conclusions.
In addition the Panel was concerned that it was vital that the MMR proposals did not depress an already depressed housing and mortgage market and make life worse for indebted consumers. Â Therefore, it was our view that unless the FSA was fully confident on the basis of solid empirical evidence that consumers would not be harmed by prompt implementation, the new responsible lending requirements should not have been brought into effect until the housing market had demonstrably recovered.
In response to the FSAâ€™s final rules â€“ published in October 2012 â€“ the Panel welcomed the FSAâ€™s â€˜common senseâ€™ approach.Â We are much happier with the position the FSA has now reached.Â This is testimony to the huge amount of work the FSA has put into the MMR. The general tone now appears to us to be far better balanced between the needs of consumers and those of the industry.
Nevertheless, while it is vital that vulnerable consumers are protected it should be in a manner that does not deprive the creditworthy from accessing mortgage finance. We believe these aims would have been more easily achievable had the FSA accepted in full our recommendations regarding mortgage prisoners, the estimation of living costs, interest rate stress testing, and the timing of implementation.
The Panel has urged the FSA to remain vigilant and supervise the new rules carefully and consistently to ensure good outcomes for borrowers. Â Â You can read the text of our press release here and our response to the final consultation here
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What we are doing
Related links on MMR:
2 May 2013 Press Release Panel welcomes early regulatory action on interest only mortgages
30 March 2012 Consumer Panel Response to CP11/31 *** Mortgage Market Review (MMR) [PDF]
30 March 2012 Jon Stern Welfare Analysis Peer Review For Financial Services Consumer Panel [PDF]
1 June 2011 Consumer Panel six point plan for a sustainable and healthy mortgage market. Â [PDF]
21 February 2011 Response to Mortgage Market Review: Distribution and Disclosure (FSA CP 10/28***) [PDF]
13 January 2011 Speech by Lynda Blackwell to the Mortgage Masters conference [PDF]
18 November 2010Â Speech by Sheila Nicoll: The Mortgage Industry Conference & Exhibition 2010 [PDF]
Consumer Panel responses to the FSA consultation on responsible lending:
29 April 2010 Consumer Panel response to the FSA's consultation on arrears [PDF]
26 April 2010 Consumer Panel response to the FSA's consultation on approved persons [PDF]
15 February 2010 Consumer Panel response to HM Treasury consultation on Mortgage Regulation [PDF]
28 January 2010 Consumer Panel response to the FSA consultation on the MMR [PDF]
October 2009 FSA MMR Discussion Paper DP 09/03 [PDF]
June 2009 Consumer Panel Mortgage arrears research [PDF]
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