New FSA regulation "threatens lenders"
06 July 2003
A new report has warned that many mortgage lenders and brokers will be forced out of the market when the Financial Services Authority assumes regulation of the industry next year.
A leading actuarial firm believes that while offering borrowers greater protection the FSA's control of mortgage sales from November 2004 will reduce the overall number of lenders due to increased compliance costs.
The FSA estimates that the new regulatory regime will cost the industry a one-off fee of £134 million and annual costs in the region of £68 million.
Co-author of the report, Mark Joannes, from Watson Wyatt, said that small to medium-sized businesses would be affected most along with broker-only lending firms.
He suggested that the consolidation witnessed in the life insurance industry after similar reforms, which led to significant job losses, would be mirrored in the mortgage industry.
Mr Joannes told The Times, "Although the products sold by the life insurance industry are more complex than mortgages, it is very possible that the loss of jobs and firms closing down could also happen in the mortgage market - not overnight but over time."