Policy
Policy brief
FSA Mortgage Market Review
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Contact: Victoria Barnard Date: 8 Oct 2010 |
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Introduction
On 19 October the FSA released their discussion paper (DP 09/3) on the future of the mortgage market ‘The Mortgage Market Review’. The DP outlined areas of the mortgage market that the FSA considers as needing change to promote a sustainable mortgage market, whilst still offering flexible choice to satisfy consumer demand.
The full Discussion paper and the BSA response can be accessed via the links below:
FSA Mortgage Market Review Discussion Paper
BSA Response to the FSA Mortgage Market Review Discussion Paper
Mortgage Market Review Feedback Statement
The FSA published a feedback statement summarising the responses to the Discussion Paper and outlining the way forward.
The feedback statement can be accessed via the link below:
Feedback Statement 10/1: Mortgage Market Review
Arrears & Approved Persons
Consultation (CP 10/2)
On 26 January 2010, the FSA published the first consultation paper from the Mortgage Market Review discussion paper relating to arrears and approved persons (CP 10/2). The deadline for responses to the CP was 30 April 2010.
The CP contained two parts, the first on changes to how lenders manage borrowers in difficulty, including restrictions on charges and fees. The second relates to the requirements for mortgage advisors to become Approved Persons.
Policy Statement
On 25 June 2010, the FSA published the policy statement in relation to arrears and approved persons. The statement reports on the main issues arising from the consultation and publishes the final rules for arrears and near final rules for Approved Persons.
The BSA Response to the Consultation and the Policy Statement in full can be accessed via the links below:
BSA Response to the Arrears Consultation
BSA Response to the Approved Persons Consultation
FSA Policy Statement on Arrears & Approved Persons
Responsible Lending
On 13 July, the FSA published its CP on responsible lending (CP 10/16). The consultation covers:
• Strengthening requirements on lenders to carry out affordability checks to determine a customer's capacity to borrow
• Requirements to verify income in all cases to ensure a borrower has adequate income to justify the loan amount
• Interest only mortgages
• Product regulation and loans with multiple high riskcharacteristics
• Arrears charges
• Responsible borrowing and better consumer education
• Non deposit taking lenders.
The BSA response and the FSA Consultation in full can be accessed via the links below:
FSA Mortgage Market Review: Responsible Lending
BSA Response to CP 10/16 Responsible Lending
BSA Response to Interest Only and non deposit taking lenders
Distribution and Disclosure
On 16 November 2010, the FSA has published their next consultation on the Mortgage Market Review, which focuses on distribution and disclosure. This consultation includes proposals to enhance the mortgage sales process, the role of intermediaries and improving disclosure of information for customers.The key proposals are:
• Replacing the obligation to issue an Initial Disclosure Document to the customer with requirements to clearly and prominently disclose key information about how the intermediary will be paid and the service they offer;
• Changing the trigger points for providing the Key Facts Illustration to minimise information overload on consumers and reduce burdens on firms;
• A requirement for all individuals that sell mortgages to hold a relevant mortgage qualification ensuring appropriate professional standards across all sales;
• Replacing the existing labels used to describe the firm’s service with the Retail Distribution Review’s ‘independent’ and ‘restricted’ labels; and
• Requiring firms to disclose to customers whether they will consider deals that can only be obtained directly from a lender.
The full CP and the BSA response can be accessed via the links below.
FSA Mortgage Market Review: Distribution & Disclosure CP 10/28
BSA Response to Distrbution & Disclosure CP 10/28
Next Steps
The FSA is expected to publish a detailed consultation paper in Autumn 2011, which will contain their final proposed rules on the MMR in its entirety, along with a detailed cost benefit analysis.
Following this consultation, the FSA is expected to publish the final policy statement and implementation timeframe in the first half of 2012.
