CML responds to FSA policy announcements

The Council of Mortgage Lenders has responded to the FSA's policy announcements today on "arrears and approved persons" and "sale and rent back" with a mixed view.

On arrears, most of the FSA's proposals already reflect lender practice. The CML is pleased that smaller firms with low levels of arrears cases will be able to apply for a waiver from the more draconian call-recording requirements that would otherwise impose disproportionate costs and beureaucracy on some lenders. Uncertainty still remains about how third parties will manage their new obligations when dealing with telephone recordings of arrears discussions.

On approved persons, the FSA has confirmed that it will take an across-the-board approach to extend the "approved persons" regime to all mortgage sales staff - both adviser and non-advised, intermediary or lender. While the CML considers this imposes an unnecessary additional cost on lenders, it does at least bring clarity to the scope of which staff are included, and successfully avoids the potential unintended side-effects of capturing administrative staff, and arrears staff putting forbearance measures in place, which was one concern about the original proposal.

On sale and rent back, the CML welcomes the additional protection that the new regime will put in place for consumers, and especially the clampdown on emotive advertising. The five-year-minimum security of tenure will help to prevent short-term exploitative acquisitions by unscrupulous companies, and the 14-day cooling-off period is also a helpful intervention in this particular part of the market, where consumers may be vulnerable and at risk of making poor upfront decisions.

CML director general Michael Coogan commented:

"In financial regulation, as in football, whether we like it or not the referee's decision is final. In this case, while we may feel somewhat harshly treated in relation to the treatment of lenders under the approved persons regime, we do recognise that the FSA is trying to make sure there is a clean game.

"We will now be working closely with the FSA on the next stage of its mortgage market review, and the crucial issues of what sort of mortgage products and what sort of verification processes it will expect in the future. These aspects have the potential for major impacts on consumers and the market - either positive or negative. It is vital that the industry and the regulator work closely together to achieve the right outcomes, introduced at the right time taking account of the state of the market, if we are to put in place a sustainable mortgage regime for consumers, lenders, intermediaries and regulators alike."