Regulators cast mortgage lenders as drug dealers at school gates
The chairman of the Council of Mortgage Lenders has accused regulators of depicting the UK’s mortgage lenders as “drug dealers at the school gates”.
Addressing the CML conference last week, Matthew Wyles said he increasingly saw lenders and intermediaries cast in this role, “enticing innocent consumers in and then getting them hooked, for their own evil profit-driven purposes”.
Mr Wyles went on to say the Financial Services Authority (FSA) should not attempt to “wrap consumers in cotton wool”.
He added: “Most lenders would prefer not to be cast in a paternalistic role …. but allowed to treat our customers as adults, helping them if they need it, but respecting their right to make their own decisions.”
Last month, the FSA set out proposed major reforms for the UK mortgage market.
Key features included imposing affordability tests for all mortgages and making lenders ultimately responsible for assessing a consumer’s ability to pay.
In this respect, mortgage advisers would be personally accountable to the FSA for the deals they arrange.
“Self-cert” mortgages would be banned, as would the sale of loans which contain certain “toxic combinations” of characteristics that put borrowers at risk.
As a result, loans to credit-impaired borrowers that are also at high loan-to-income could also be outlawed.
On arrears, the regulator has declared that lenders should not profit where a borrower is adhering to an agreed repayment plan, and is therefore proposing to ban arrears charges in these cases.
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