CML boss raises fears of FSA red tape
Regulators should avoid stifling innovation within the mortgage industry, Martijn Van der Heijden, chairman of the Council for Mortgage Lenders, has warned.
Mr Van der Heijden, who is also head of lending for HSBC, told delegates at the trade body’s annual lunch in London that the FSA should allow the market to continue to innovate without the burden of over-regulation.
Mr Van der Heijden said: “It is time for the £1.2 trillion UK mortgage lending industry to pull together, focus on quality, and innovate for the good of customers and the long-term health of the UK housing market.
He suggested that the FSA - and, in particular, some elements of the regulator’s mortgage market review - may be putting pressure on providers to be less innovative.
He added: “There may be pressure from regulators to do so, but to throw away our diverse market place would be an eternal shame and won’t help society.
“While I don’t want to see the good things about our market and our industry lost or forgotten, I am equally certain that we shouldn’t be too afraid of change.
“Let us at least see if we can’t collectively unlock some new and positive thinking about our collective contribution to the future UK housing market.”
He also said the mortgage industry needed to be more accountable to customers, adding: “I think we have to be more honest, more transparent, more intelligible, to our customers. We need to be clear about what we provide and how we provide it.
“More importantly, we need to make a true cultural shift from a sales culture, to a service culture.
“Somehow, after deregulation but before the credit crunch, mortgage lending sleepwalked into becoming a commoditised sales business rather than a true customer relationship business. It took the credit crunch to wake everyone up, and now we need to make sure we stay awake.”
However, Mr Van der Heijden told attendees that increasing confidence should not simply mean defaulting to the ultra-conservative, building in safety buffers on capital, conduct and market differentiation, leading to “a small market of homogenous offerings”.
An FSA spokesman said: “We have been working on the mortgage market review for some time, taking care to get input from all relevant stakeholders within the mortgage industry.
“There is a need to reform some aspects of the mortgage industry. Consumers need protection, but we also need a sustainable mortgage market which balances innovation with a fair deal for consumers.”