United industry front vital to shape MMR
04 Mar 2011
With a distinct degree of continuity and cooperation that the protagonists have hardly been famous for in the past, the three main mortgage trade bodies – AMI, CML and IMLA – all issued their public responses to the latest MMR paper last week.
While the Distribution and Disclosure Consultation Paper was the last document to spring forth from Canary Wharf, all three ‘trades’ were focused on MMR in its entirety, rather than one of its constituent parts.
As mentioned there was a fair degree of overlap and agreement in the three press releases and it will be no surprise to learn that all three have worked together in order to generate their individual responses.
Without having seen the actual submissions to the FSA I would be very surprised to see them differ that much in substance; I would also suggest that the three taken together deliver the most focused ‘mortgage industry response’ to the regulator we have ever seen.
I have always been a great believer that our industry works better when it works together and it would seem that it has taken the MMR to bring about something akin to ‘peace in our time’.
Certainly, the back-biting of the past particularly between AMI and the CML appears to have disappeared, which can only be a good thing given that the two sides need to work together to get the outcomes we all want to see. Our market cannot and will not thrive if both lenders and brokers are singing from completely separate hymn sheets.
That is not to say that each trade body isn’t pushing for particular action in certain areas whilst at the same time setting out some scenarios they would like to see in place. For instance, AMI’s call for compulsory advice will not be one shared by many of the CML’s members however one senses compromise in its suggestion this could be limited to ‘high risk’ groups such as the credit impaired, those borrowing into retirement or first-time buyers. I do wonder how many lenders would view first-timers as high-risk but that is another point.
AMI’s compromise position is set out in its reaction to continued non-advised sales which it says it can live with if the position is clearly set out for consumers about the protections they will lose by following this route. It would be remarkable if the non-advised/execution-only route was outlawed in some way, however, never say never, certainly when it comes to what edicts are coming from Europe in the near future.
Clearly, all three trades are concerned about the MMR as it currently stands. The issue being that clarity appears to be in short supply at present. We have no real idea when MMR might be implemented, indeed, the only timetabled MMR event – the changes to the authorised persons rules bringing in the individual authorisation of mortgage advisers - were not just put back by a few months but by a couple of years. And one suspects this is hardly a set in stone date either.
So, as is rightly pointed out in these responses, the mortgage industry needs to feel slightly more assured and clued up on the FSA’s intentions for MMR. I would also support bringing all the MMR proposals within one consultation rather than the situation we have now. All issues and suggested proposals are inter-linked and cannot be decoupled from each other so it makes perfect sense to pull all facets of the MMR debate and eventual outcomes together.
It would also help if, at this next stage, the regulator delivers its intended timetable for MMR implementation. The trade bodies are right in that it is difficult to plan and prepare for something if you have no idea when it might begin; plus at this stage we are all second-guessing what rules will be introduced anyway. The MMR proposals are already changing the market as lenders react to what they believe will be introduced which is a bizarre situation, to say the least.
And as mentioned previously, we have the potential fly in the MMR ointment of what European legislators are planning for the mortgage market. With these proposals still unclear it would seem common sense to consult and incorporate what the EU is planning into the MMR now, rather than announce a raft of proposals first, only then to have to change and redevelop when the European measures are delivered.
All in all, the responses from the three trade bodies appear to present a unified call for the FSA to draw breath. One would be hard pressed to disagree with this approach especially if the regulator is then able to provide a coherent strategy, based on industry responses, and a structured clarity about how they see the whole MMR process panning out.
At present the industry appears to be in limbo and if we want to continue driving forward to deliver a far healthier mortgage market then it is appropriate for all to take their time and ensure we have the right proposals which do not damage the still fragile recovery we are witnessing.
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