Commenting on the FCA Discussion Paper response, Paul Broadhead, Head of Mortgage & Housing Policy at the Building Societies Association, said: 

“We welcome the FCA’s proactive approach to ensure mortgage regulation enables a dynamic, growing and inclusive market. The review provides a timely opportunity to reshape the mortgage market to ensure it is fit for today’s borrowers, and those in the future. Changing customer demographics and the increasing demand for tailored lending solutions must be matched by responsible and flexible regulation. 

“The FCA’s goal of ensuring the regulatory framework supports innovation, competition and market growth is something we strongly support. The removal of legacy rules that are inhibiting this growth and innovation and enabling greater use of technology along the customer journey are a key part of achieving this. 

“We have consistently highlighted the need for a broader perspective when comparing the customer outcomes of homeownership with those remaining in rental accommodation, often at a higher cost and without the opportunity to build property wealth.  We are in full agreement with the FCA’s assessment of the key trade-offs involved to enable a more balanced approach to risk, but would urge the regulator to allow the recent LTI changes and clarification on the stress rate test to fully bed in before committing to any future change.  

“We would also encourage the regulator to prioritise changes that could deliver the greatest benefit to market growth and to help more people into homeownership through a phased permissive approach.  

“While regulatory change will help shape the mortgage market of the future, it is not a fix all. To ensure that we enable a dynamic, growing and inclusive market, the mortgage industry must work together to address the challenges we face today and plan for the future. Success will require collaboration and co-ordination across the mortgage and housing industry, from government and lenders, to conveyancers, brokers and technology providers.” 

[ENDS]

Notes

The BSA's full response can be viewed here

About the BSA

The Building Societies Association (BSA) represents all 42 UK building societies, as well as 2 mutual – owned banks and 7 credit unions. Building societies and mutual – owned banks have total assets of almost £650 billion. They hold residential mortgages of over £485 billion, 29% of the total outstanding in the UK. They also hold over £485 billion of retail deposits, accounting for 23% of all such deposits in the UK. Building societies and mutual - owned banks account for 47% of all cash ISA balances.

They employ around 52,300 full and part-time staff and operate through approximately 1,300 branches, a 30% share of branches across the UK.