Financial Regulation: a preliminary consideration of the Government's proposals - Treasury Contents

Written evidence submitted by the Council of Mortgage Lenders

  The CML is the representative trade body for the UK residential mortgage lending industry. Its 109 members currently hold around 94% of the assets of the UK mortgage market. In addition to lending for home ownership, the CML members have also lent over £138 billion for buy-to-let mortgages to support a private rental market, and over £60 billion UK-wide for new-build, repair and improvement to social housing.

  We are writing to offer our support to the evidence submitted today by the British Bankers' Association. We have similar concerns about the new regulatory structure proposed by the Treasury and will be submitting a response to their consultation paper in due course.

  In particular, we are concerned about the CPMA being described as a consumer "champion" and the potential imbalance between the primary objective of the CPMA (to ensure confidence in financial services and markets, with a particular focus on protecting consumers and protecting market integrity) and its secondary considerations around the principles of good regulation, the potential impact of policies or regulatory decisions on consumer and business lending and the need to maintain diversity in the financial services sector. In our view all these issues are equally important. Like the BBA we would also prefer to see a description of a marketplace in which consumers are provided with clear product information from which they can make informed choices. This would ensure that consumers themselves have responsibility for their financial choices.

  Whatever the new structure, we believe that there should be constructive dialogue and interaction between the prudential regulators and conduct of business regulators. Changes in conduct of business regulation can have impacts for prudential regulation and vice versa. This is demonstrated by the current FSA's mortgage market review which although is aimed at conduct of business regulation has implications for prudential regulation. For example, if there are changes in the way new business is written there may be implications for the back book leaving lenders exposed to potential prudential risks that were unintended.

22 September 2010

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