Moray McDonald, the Council of Mortgage Lenders’ chairman, told the trade body’s annual conference this morning (10 November) that the European Union Mortgage Credit Directive is a “complete waste of time”.
Moray McDonald, also RBS’ managing director for products, personal and business banking, paraphrased Winston Churchill as he spoke in the national liberal club’s headquarters.
“I propose the motion that never has so much been done for the benefit of so few people,” he said to resounding agreement from the audience.
He argued that between the new rules from Europe and those implemented by the UK regulator, lenders are still having to devote resources to regulation rather than better servicing customers.
It was back at the start of this year that the government published legislation which will incorporate new European regulations on mortgage lending into UK law.
Regulations set out transposing the Mortgage Credit Directive into UK law contained other changes, including bringing the regulation of ‘second charge’ mortgage lending into line with ‘first charge’ mortgage lending.
The government said it had waited for the European directive before implementing this latter, in order to avoid excessive disruption to both lenders and customers.
A key area of the new rules was the introduction of a new set of regulations for buy-to-let lending, where the lending is to consumers rather than for business purposes.
So-called ‘accidental landlords’ will now see their mortgages fall under the regulator’s scrutiny.
Also speaking at the conference Ian Larkin, co-group chief executive at Target Group, said: “This industry does need a healthy amount of regulation, but that does need to be smart rather than just volume.
“Regulation is undoubtedly tough on lenders, but I don’t think it’s stifling innovation. You just have to look at the amount of banking authorisations the FCA is working through to see that.”
Kicking off the conference, being held at One Whitehall Place in London, the CML’s Mr McDonald also asked whether lending growth this year was compatible with far slower rate of new houses being built.
He said: “We have to ask ourselves, the better we do, the worse affordability gets in the market,” he noted, adding that it has been 36 years since the housing stock actually met building targets.
peter.walker@ft.com
