Jan 2012: The wheel will turn

Paul Smee, director general of the Council of Mortgage Lenders gives a brief overview of what he sees as some of the challenges in 2012

In the end, there was little choice over my holiday reading material. With an enormous thud, the FSA’s mortgage market review (MMR) finally landed on our desks just before the holiday. At 781 pages in four separate documents, it proved to be more than just a stocking filler.

It means that, as an industry, we hit the ground running in 2012, which I suppose is the right sort of start to the Olympic year. We have already begun consulting with members, as their own special pre-Christmas treat.

There is a huge amount of detail for us to work through, but I stand by the comments I made when the MMR was published in December. We must make sure that lending continues to be undertaken responsibly, and that it is carried out in a way that protects consumers. Rules need to be practical and to avoid unintended consequences. Of course, there are wrinkles to be ironed out.

But we want to help the FSA with that task, and to work towards smooth implementation, planned for mid-2013 at the earliest.

Clearly, it will be helpful for UK lenders if legislative proposals that will emerge from Europe can now dovetail with what the FSA plans to implements. To try to deliver as much symmetry as possible between the two sets of rules, we will be working to influence the European plans with the FSA, the Treasury, other trade bodies and MEPs.

Government initiatives

Although we face a huge regulatory workload in 2012 and beyond, there are plenty of other challenges on our horizon. The new-build indemnity scheme is a cornerstone of the government’s strategy for housing, and growth, and ministers want to see it up and running in the spring.

As ever, though, we need a joined-up approach from the authorities. So, we will be reinforcing the message we gave at the time of the FSA’s MMR announcement: if lenders are to make their contribution to improving the supply of housing and to the wider growth agenda, then they need a regulatory framework which supports that objective.

This year, the government will also be consulting on proposals for support for mortgage interest, right-to-buy and the green deal. On behalf of members, we will be responding vigorously on all of these – and doubtless many other – issues.

For example, we will need to refine industry approaches on both arrears handling and fraud prevention. It is my belief that funding issues will also become increasingly significant in 2012, at least for some of our members, and we will be looking at appropriate ways in which we can offer our support.

Visiting members

One of the personal tasks I have set myself this year is to embark on a rigorous programme of visits to members. So, if you would like to meet, please let me know. Looking at the agenda I have set out for this year, there should be plenty for us to talk about (and there will be other issues, including those we cannot anticipate).

I do want to hear your views, not only on what I see as the priorities, but on what you believe to be the major challenges for your businesses in 2012 and beyond.

Intermediary sector

Another of my goals this year is to reinforce the CML’s role as like a spider at the centre of the industry’s web, ready to reach out to stakeholders in any direction. One of those key stakeholders is the intermediary sector, and I will be developing the ways in which we conduct a dialogue so that we can discuss matters of mutual interest at a strategic level.

At all levels, it is important for us to communicate with the right people in the right way. So, while it is essential for us to continue to provide a strong and clear voice on behalf of the whole industry at times, I am also keen to explore how our services to different groups of members could be differentiated.

So, there it is: a brief overview of what I see as some of the challenges we can anticipate for 2012. We know that we will be operating in a challenging environment, reflected in the forecasts we published just before Christmas. There will be increased pressure on household budgets, low levels of consumer confidence and the looming euro zone problems may get worse before they get better.

As we now put the holiday season behind us, it is time to put our shoulder to the wheel. But, as I said at my first CML conference last November, I am confident that the wheel will turn. We need to make a huge collective effort in response to the challenges ahead, but I have already seen enough of this industry – and of my own team at the CML – to know that we have the talent and determination to get the job done.