FSA proposals 'will not benefit everyone'

Posted: 20 Dec 2011 12:36:37 GMT

Around one-in-40 homeowners will have difficulty obtaining a mortgage under the FSA's new proposals.

While the Financial Services Authority's (FSA's) Mortgage Market Review acknowledges that a one-size-fits-all approach to home loans is not applicable, the proposals fall short by not benefiting everyone.

This is the suggestion of Grenville Turner, chief executive of Countrywide, who noted the new direction will mean that one-in-40 new customers who would be eligible for a mortgage might struggle to access such a deal.

Mr Turner explained the FSA has admitted to this flaw, adding such policies can result in an even stricter lending environment emerging as all affordability assessments are to be left up to the discretion of providers' risk teams.

The industry figure stated: "To ensure that these measures do not stagnate the market further, lenders will need to become more flexible with the affordability assessment criteria for new borrowers including a workable replacement for the self-employed and homeowners stuck in negative equity."

He explained that while Countrywide supports the recommendations - which will ensure all home loan advisers are qualified to the desired standard and thoroughly trained - a lack of clear intention regarding individual registration "is disappointing".

"This would cement the foundations for a level playing field for professional standards in the mortgage industry," Mr Turner pointed out, adding this could also prove valuable regarding fraud prevention measures.

As part of the consultation process, Countrywide said it would like to see a combination of the required qualifications and individual registration, as this will serve to boost professionalism and standards in the industry.

Such an improvement is therefore likely to serve as a positive outcome for consumers throughout the UK.

Lord Turner, chairman of the FSA, had earlier explained that the new proposals had been made to help ensure better practice continues in the future and that previous examples of risky mortgage lending - such as those seen during the boom years - are confined to the past.

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