Delivering a strategy for housing

There is a mixed picture, but I am left with the impression that if the mortgage market was a dance being viewed by Strictly Come Dancing judge Craig Revel Horwood, it would be described as ‘dull’ and struggle to get a mark which would make contestant Russell Grant proud.

Let us start with some good news, though some may disagree with me. Six months after it was due to be published, we are still awaiting the next consultation paper on the mortgage market review from the FSA.

I have argued since the initial FSA consultation on responsible lending in Spring 2010 that there was no need to rush in changes to mortgage rules. The mortgage market has self-corrected and addressed the failures of the past, and a more vigorous supervisory approach means targeted action can, and indeed has, been taken against particular firms which have fallen short.

The mortgage market review is to build a regulatory structure for the long term, but it cannot provide solid foundations while the mortgage market itself is going through the ongoing shocks which started in 2007 and have rippled across global markets. As we stand on the cusp of a possible new recession across Europe, potentially including the UK, it is simply not an urgent priority for the FSA.

Yet the commitment remains to publish “in the autumn”. Sheila Nicoll recently confirmed the paper would by published “shortly”. I hope that the FSA will not ruin the industry’s festive spirit, because I suspect many are looking forward to the end of year break to re-charge their batteries for the challenges in 2012.

There is the additional complication of existing proposals for a European wide intervention into the mortgage market. And the considerable work which flows from the plans to split the FSA into separate prudential and conduct regulators. So, the FSA cannot now expect to implement new conduct rules in 2012? With a risk averse, small market, with muted competition for new business, moving the mortgage regulatory deckchairs several times would seem of limited value, and would not enhance the regulator’s reputation.

Let me emphasise that the status quo is not what I am advocating.

There are some important changes that should in future be embedded in the rules to strengthen the regulators’ hands and clarify requirements for regulated firms. However, with all of the other pressures on banks and building societies, national governments and world economies, now is not the time to divert people’s attention from the pressing issues – the fires that have to be fought today.

The second of what I have loosely termed my ‘legacy’ issues from my time at the CML is improving access to the market for first-time buyers, and other movers with small deposits, through enhancing housing supply and increasing new build sales.