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Press release
BSA responds to FSA’s proposals on responsible lending
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Contact: Rachel Wylie Date: 13 Jul 2010 |
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The FSA has today published further proposals on reforming the mortgage market.
Commenting on the FSA’s consultation paper on responsible lending, Paul Broadhead, Head of Mortgage Policy at the BSA, said:
“Assessing affordability and a customer’s ability to meet regular mortgage payments have always been central to building societies’ lending decisions.
There is a risk that the FSA’s proposals will prevent some credit-worthy customers getting a mortgage and create mortgage prisoners. To ensure borrowers are not adversely affected, it will be important that when the rules are implemented they provide clarity for lenders and are enforced consistently across the market.”
The consultation also sets out the FSA’s current thinking on interest only mortgages. Paul Broadhead added:
“Interest only mortgages are not inherently bad or high risk. However, it is important that borrowers with interest only mortgages understand the importance of having a plan in place to repay their mortgage at the end of its term. The FSA needs to proceed with caution so as not to restrict the use of interest only as a way of helping borrowers overcome repayment difficulties.
Broadhead also called for the FSA to ensure there is a greater balance between responsible lending and responsible borrowing, saying:
“Borrowers must be empowered to take ownership of their choices and decisions. Well informed decisions are more likely to deliver consumer benefit. Placing all the responsibility and burden on lenders only weakens the position of consumers in the long term and should be avoided.”
The BSA remains concerned that the FSA is conducting the Mortgage Market Review against a backdrop of significant prudential and supervisory change. Broadhead calls for the FSA to think carefully about how it proceeds, adding:
“Decisions and implementation should not be rushed. We have seen several changes at a prudential and supervisory level, and the impact of these should be fully assessed before conduct of business rules are changed. This will enable the FSA to make targeted changes where consumer detriment persists.”
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Notes to Editors
- The Building Societies Association (BSA) represents mutual lenders and deposit takers in the UK including all 50 UK building societies. Mutual lenders and deposit takers have total assets of over £370 billion and, together with their subsidiaries, hold residential mortgages of over £235 billion, 19% of the total outstanding in the UK. They hold almost £250 billion of retail deposits, accounting for just under 22% of all such deposits in the UK. Mutual deposit takers account for about 36% of cash ISA balances. They employ approximately 50,000 full and part-time staff and operate through approximately 2,000 branches.
- Photographs of Paul Broadhead are available from the BSA press office, or from the Association’s website at www.bsa.org.uk or Headlinemoney www.headlinemoney.co.uk
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Contact:
Rachel Wylie - 020 7520 5905 / rachel.wylie@bsa.org.uk
