CML: FSA MCOB effectiveness review of lifetime and sub-prime

The Council of Mortgage Lenders welcomes the report from the Financial Services Authority on the second stage of its review of the effectiveness of the mortgages conduct of business rules (MCOB), which focuses on the effectiveness of the rules as they relate to lifetime mortgages and the sub-prime mortgage market.

The CML believes that the FSA is sensible to publish its observations on the effectiveness of the arrears rules at the same time as its wider thematic findings on firms’ arrears management practices in June. The thematic study is currently under way.

Commenting on today’s findings, CML senior policy adviser Kate Davies said: “The first stage of the MCOB review looked at the mainstream mortgage market, and today’s findings relate to the much smaller niche markets of lifetime mortgages and sub-prime lending. It is perhaps unsurprising that borrowers in these markets seem to be using their key facts illustration more as an information check than as a tool for shopping around.

“The FSA may have missed a trick in failing to incorporate the old Mortgage Code requirement for advised sales to include a “reasons why” letter into its own rules. But we agree it makes sense to wait for the outcome of European developments before making any significant overhaul of the regulatory regime.”