16th November 2010
Given its concerns about the progress and adequacy of the FSA’s Mortgage Market Review (MMR), the Financial Services Consumer Panel is urging the Financial Services Authority (FSA) to take more time to ensure its proposals deliver the consumer benefits it intends. The Panel is keen to see an end to previous irresponsible lending practices. It believes, however, that the FSA needs to do more work before introducing new rules with potentially far-reaching consequences.
In particular, the Panel is advising the FSA to undertake a full cost benefit analysis to ensure the wider social and economic implications of its affordability proposals are fully understood. It also wants the FSA to look more closely at the transitional arrangements for existing borrowers as well as the proposed regulatory arrangements to deal with future housing market bubbles.
Adam Phillips Consumer Panel Chair commented:
“It is vital that the FSA now undertakes a thorough economic analysis on the likely impact of the MMR proposals. We need to understand the human and social implications of these changes as they could have major consequences not just for existing and future borrowers, but for the UK housing market as a whole. The FSA does have time on its side, given the lack of any imminent recovery in the housing market.
We are also concerned about how the MMR proposals will interact with other initiatives which may be taken to regulate emerging property bubbles by controlling lending by banks and building societies. It is essential that proper consideration is given to the respective remits of the new regulatory authorities.
We will continue to engage with the FSA as this critically important review develops. It is in both our interests to help ensure a mortgage market that works well for consumers.“
Notes to editors
The Consumer Panel’s written response to the FSA’s latest MMR consultation is available. The Panel’s previous response to the September 2010 MMR consultation FSA CP 10/16 on responsible lending is also available.
The Consumer Panel is a statutory body under the Financial Services and Markets Act 2000 and was initially established by the Financial Services Authority in December 1998. The Panel advises the FSA Board on the interests and concerns of consumers and reports on the FSA’s performance in meeting its objectives.
The emphasis of the Panel’s work is on activities that are regulated by the FSA, although it may also look at the impact on consumers of activities outside but related to the FSA’s remit.
There are currently eleven members of the Panel as listed below. (For further information on individual members, see Who is on the panel)