FCA comments on Financial Policy Committee recommendations

Commenting on today’s recommendations from the Financial Policy Committee, the Financial Conduct Authority said:

"Following the FPC’s recommendations today, the FCA will consult on general guidance which will provide details on how we propose to follow the recommendation on loan to income ratios. This will include how we will calculate and apply the de minimis £100 million threshold and the ratios.

"This will only affect a small number of FCA regulated firms so general guidance is considered a proportionate and appropriate approach to implementing the loan to income ratio, especially whilst the industry continues to adjust to the Mortgage Market Review.  

"With respect to the FPC’s recommendation on interest rate stress testing, our mortgage rules require firms to have regard to FPC recommendations on stress test levels. We expect lenders to have regard to what the FPC has said today.

"The FPC’s recommendations come after the introduction of the MMR in April and are consistent with our aim to hard-wire common sense into mortgage lending and ensure that mortgages remain affordable for consumers if interest rates rise in line with market expectations."

Notes for editors

  1. On 1 April 2013 the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
  2. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
  3. Find out more information about the FCA.