24 October 2009

The PM once told us we'd never had it so good....

Predictably, the major talking point in financial services is the FSA’s Mortgage Market Review. Some of the proposals include:

1) Removal of Self Certification mortgages:
Self Cert mortgages account for approximately 10% of the residential market. True, this offering has been abused by a few yet, in the main, Self Cert is a valuable product offering. Once abolished, existing customers may become trapped in their current mortgage. Possibly with a lender no longer operating meaning that they may be unable to refinance or move. At current low interest rates this may not be an issue. However, when rates increase quickly, a new mortgage may be difficult to realise and may result in customer arrears or, worse still, repossession due to lack of options. Those who are self employed and have difficulty proving income (which may come from a variety of sources) or recently established businesses will undoubtedly find it more difficult to obtain a mortgage, if at all, should these new proposals be approved.

2) Lenders to assume responsibility for a consumer’s ability to pay:
Why give credit to someone who can’t afford it? This should be happening now! I agree with this in principle but it needs to be widened to the Credit Card companies still sending out “pre-approved - sign here” forms on a daily basis. If I said yes to them all, I could be ‘quid’s in’ but could I afford the repayments…?

3) Requiring all mortgage advisers to be personally accountable to the FSA:
This one is interesting. We are already authorised and regulated by the FSA and this proposal wants us to be accountable for the mortgage you take. In effect this proposal removes the consumer’s responsibility for any transaction undertaken. Whatever happened to Caveat Emptor? Can I buy a lottery ticket and then sue the provider if I don’t win?

4) The regulation of Buy-to-Let and all Secured Lending:
Great idea and I 100 per cent agree, once authorisation and regulation of the current residential markets have been tried, tested and proven! If they were, would we be in this mess?

Obviously there are many more proposals, but I’ve so few column inches! The certainty with this review, if implemented, is that consumers will have less choice and pay more. Do you remember a PM telling us that we’d never had it so good?

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