FSA mortgage lending proposals 'place burden on lenders'

Date:Tuesday 13th July 2010
Author: Susanna Kavka

The Building Societies Association (BSA) has suggested that new Financial Services Authority (FSA) mortgage lending proposals may place too much responsibility in the hands of lenders.

Paul Broadhead, head of mortgage policy at the BSA, explained that consumers will ultimately be left in a worse-off position if the burden of responsible financial activity is left with banking institutions.

He said: "Borrowers must be empowered to take ownership of their choices and decisions. Well-informed decisions are more likely to deliver consumer benefit."

In his view, the FSA's notion of interest-only mortgages is also too negative, since he believes such products can be a useful alternative for customers who are struggling with repayments.

Mr Broadhead stressed that building societies have always done all they can to judge whether a person can afford a home finance deal before granting it.

Meanwhile, Association of Mortgage Intermediaries director Robert Sinclair suggested the FSA mortgage lending proposals could have significant effects on costs for finance providers.