She said:
"We expect the structure of the second charge market to change - it's structurally very different to the first charge market, and moving it into this market means it's inevitable that it's going to have to really change."
She acknowledged that some second charge lenders may be considering whether the scale of changes needed were worth it, and said she did not underestimate how significant an effect this would have on that area of the market.
She warned that while there is a distinction between responsibility for advice which falls to the broker, and for affordability checks which fall to the lender, brokers should have a clear idea of what their client can afford, with Blackwell noting this was "part of knowing your customer". She added that the huge advantage of intermediaries was their knowledge of the market and that this understanding tends to mean consumers are directed to the most appropriate lenders even before the affordability assessment came into play.
Blackwell also reminded lenders that transitional rules for affordability do not apply to all cases.
Citing scenarios such as porting the mortgage to another property or a simple rate switch, which are exempt from the affordability requirements, she said there was simply 'no need' to carry these checks out.
She added:
"If the lenders are doing an affordability check in these cases - for example on a rate switch - they are doing that notwithstanding our rules, which say you don't need to. It's nothing to do with our transitional rules."
She noted, however, that in the case of applying the transitional rules, the regulator had recognised the need for exceptions in individual cases, and that it had 'put those special arrangements in place to allow lenders the flexibility to make their own decisions', as long as they were in the best interests of the customer.
A number industry experts gathered in London this morning at the networking event where Blackwell clarified the regulator's transitional rules and discussed concerns and questions from the lenders present.
