BSA raises concerns on consumer control and intrusive questioning in its response to the FSA’s Mortgage Market Review
The BSA has today submitted its response to the FSA's final Mortgage Market Review proposals.
It is clear that the FSA has listened, and taken a substantial amount of industry and consumer feedback into account in its amended proposals, which will shape the mortgage market in the UK for the foreseeable future both for consumers and lenders. However, the BSA remains concerned about a number of specifics, in particular the intended move to a fully-advised mortgage market and consumer reaction to the extra information that lenders will have to collect to assess affordability.
Commenting, Paul Broadhead, Head of Mortgage Policy at the BSA said: "The policy decisions of this government are focused on putting consumers back in control of their own finances. The proposal from the FSA to move to a fully-advised mortgage market flies directly in the face of this taking consumer control in the opposite direction.
"The FSA is right to ensure that vulnerable consumers always get mortgage advice. That said, to force other financially savvy consumers with previous experience to take advice, whether they want it or not, runs the real risk of detaching the applicant from both decision and process.
"We understand that the move to a fully-advised market is designed to solve the issue of consumer confusion. This can happen if a lender or an intermediary is not crystal clear with a mortgage applicant about whether they are receiving advice on what's right for them or just information on the product range and features available. If this is true, this issue can be addressed simply, and with no risk of unintended consequence, by tightening the disclosure requirements for lenders. This will ensure that a consumer has a clear choice on having advice or information when they first apply.
"It is a fact of life that under the proposed new regime consumers will have to get used to far more intrusive questioning from lenders and lenders will need to get used to asking more probing questions. Neither will be easy, and it will take adjustment on both sides. Some management of consumer expectation and understanding, perhaps through the Money Advice Service would be helpful before 2013 to avoid a potential consumer backlash.
"Even with these significant concerns, we welcome the substantial shift made by the FSA compared to the controversial set of proposals published in 2010. The proposals on the table now are broadly sensible and in many areas are likely to deliver the intended outcomes."
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Contact
Hilary McVitty, Head of External Affairs
Tel: 0207 520 5926 / 07507 837 326
Email: hilary.mcvitty@bsa.org.uk
Notes to Editors:
1. The Building Societies Association (BSA) represents mutual lenders and deposit takers in the UK including all 47 UK building societies. Mutual lenders and deposit takers have total assets of over £375 billion and, together with their subsidiaries, hold residential mortgages of over £235 billion, 19% of the total outstanding in the UK. They hold more than £250 billion of retail deposits, accounting for 22% of all such deposits in the UK. Mutual deposit takers account for 34% of cash ISA balances. They employ approximately 50,000 full and part-time staff and operate through approximately 2,000 branches.
2. The BSA's full response can be viewed at http://www.bsa.org.uk/policy/response/mmr_cp_11_31_.htm
3. Photographs of Paul Broadhead are available from the BSA press office, or from the Association's website at www.bsa.org.uk/mediacentre/contacts/spokespeople or Headlinemoney www.headlinemoney.co.uk
Katie Wise
Policy and External Affairs Officer
Building Societies Association
6th Floor, York House
23 Kingsway
London
WC2B 6UJ
Tel: 020 7520 5904
Email: katie.wise@bsa.org.uk
Web: www.bsa.org.uk
Twitter: @BSABuildingSocs
Join the big debate! Lots of business, media, political and regulatory leaders speaking at the BSA Conference, sponsored by Credit Suisse, Manchester, 9/10 May. More at www.bsaconference.org
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