Quantcast
Menu

News

Regulator intervention could stifle mortgage market

Julia Rampen
Written By:
Julia Rampen
Posted:
Updated:
06/02/2013

New powers allowing the future regulator to intervene in the way financial products are sold could discourage innovation, the Council of Mortgage of Lenders (CML) has argued.

Reflecting on the Financial Services Authority’s proposals to hand the Financial Conduct Authority (FCA) powers to make temporary rules, the lenders’ body argued there could be unintended consequences for consumers.

The trade body said a fear of falling foul of the regulator could discourage new operators from entering the market as well as innovation: “We believe there is a real risk that uncertainty about the rules could lead lenders to take a more cautious approach to innovation, particularly given the lack of clear understanding about how and when the FCA could use its powers.”

The CML acknowledged the rationale for swift intervention in financial services but called for the use of such powers to be “truly exceptional”, as well as more detail about the means by which they would be imposed.

The question of how cases outside the jurisdiction of the FCA would be treated was also raised.

The CML’s comments come a day after former Monetary Policy Committee member Professor Charles Goodhart argued that banks’ fears about accusations of mis-selling could prevent them creating more complex home financing products, despite the benefit these could have to the housing market.