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fsa mortgage discussion paper 2 October 19, 2009

Posted by Bradley in : consultation , trackback

The industry is reacting to the FSA’s DP in the usual ways, and some in the press are characterizing the DP as an over-reaction (although the FT says the proposals are “crude. But .. should …be welcomed”). The British Bankers Association responds to the DP with the rhetoric which was used to justify the relatively unregulated sub-prime lending market before the crisis:

It should be a firm principle of mortgage regulation that higher-risk borrowers such as self-employed people and first-time buyers are not effectively cut out of the market. The issue that faces all of us – lenders, borrowers and regulators – is ensuring the risk of taking out a mortgage can be shared effectively. Any new rules must not serve to create unreasonable obstacles either for lenders or for borrowers.

And the Council of Mortgage Lenders bangs the consumer responsibility drums:

It is important that the principle of consumer responsibility is not lost in such a regulatory environment, as it is a basic tenet upon which transactions of all kinds between firms and consumers rely.

Seems like the beginning of a lively debate.


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