With the MCD regulations now finalised, many in the industry have been taken by surprise according to Wood. and the questionable timing of the announcement coinciding with the end of the parliament and the start of the General Election campaign means that there will be no politicians to raise awkward questions.
He said: “I find it an extraordinary decision. The raft of regulation under MMR was specifically designed to keep the interests of customers foremost. The FCA had carefully put in the transitional rules arrangements, which meant that existing borrowers would not be at a disadvantage from the new affordability rules when their current deals ran out, or they wanted to remortgage, and yet our European lawmakers have seen fit to torpedo this.
"While I am sure the FCA has been protesting strongly about the decision (or at least I hope they have), I am particularly concerned that in the rush to have conformity across the EU, our much more sophisticated lending market is going to be saddled with a decision which makes no concession to common sense and engenders very real customer detriment. The blinkered desire for an all encompassing European compliance agenda will be the cause of actual and real hardship and store up problems for the future.”
Jeremy added, “Another concern arises in that there is now no compulsion on lenders to treat these existing borrowers fairly. While I am sure there will be no conscious intent to take advantage of what has become a captive audience, by the same token, there is also no incentive to help them and they are open to abuse even if it is by neglect. We need to remember that interest rates are not going to stay this low forever and if interest rates start to go up then those on SVRs are going to suffer. It cannot be a good outcome that a significant part of the population will be excluded from the remortgage market via rules which are supposed to help them.
"I am bothered that there has been so little comment or even a groundswell of opinion from the industry to make an argument for reinstating the transitional rules past March next year. I can only hope that the FCA is continuing to lobby for an exemption even at this late stage. I would be aghast if we just simply accept this as a fait accompli. Unfortunately, there is no incentive for the larger lenders to raise their voices on the topic, but there is nothing stopping the intermediary community and smaller lenders from taking up the cause.”
