That was what the Conservative MP Robert Syms told his colleagues after securing an adjournment debate on the MMR in the House of Commons earlier this week.
Introducing the debate on Monday, Mr Syms said that if the FSA listened to representations, it could improve the market.
But, he added:
“if it goes the way of some of the proposals…it could have a profound and bad effect not only on the economy but on the prospects for many of our constituents.”
Replying to Mr Syms, the financial secretary to the Treasury, Mark Hoban, argued that the FSA was committed to a smooth transitional period and would not implement any changes until the market was back on a stronger footing.
Earlier, Mr Syms had said he supported the FSA’s stated objectives of creating a flexible mortgage market that is sustainable for all participants and works better for consumers. But it was crucial for the FSA to recognise that current problems were “primarily the result of liquidity and structural issues arising from global financial markets,” Mr Syms argued.
He continued:
“They are not a result of a dysfunctional and widely irresponsible residential mortgage market. The FSA should be mindful that it is not focusing its attention on fixing the wrong problem.”
The “overwhelming majority” of borrowers were keeping up with mortgage payments, Mr Syms pointed out, suggesting that the vast majority of lenders had acted responsibly and been positive and sympathetic to customers in difficulty.
The mortgage rescue scheme introduced by the last government may not have helped large numbers of people directly, he argued, but it had pointed those in difficulty to their lender, who had then helped them deal with their problems.
The MP said he was concerned about the impact and direction of the MMR:
“The current proposals will have a far-reaching effect on the wider economy, but the FSA’s impact assessment does not consider those wider consequences.
"They should be considered because housing is an important component of our economy. There are also fundamental concerns about many proposals transferring responsibility away from the consumer and to the lender.”
The proposals, he argued:
“take the very patronising view that customers need protecting from themselves – a view that could be insulting to many mortgage borrowers. In my experience, the people who get most upset are those who are refused a mortgage, a loan or some help from a bank.”
Setting prescriptive rules would lead to some creditworthy customers being excluded from the market, which was “not an acceptable position.” The MP also argued that the proposals would affect more customers than the FSA expected. “Tighter controls on affordability assessments will not weed out customers on the margins only; they could have a much wider impact on the market,” he said.
My Syms was supported in the debate by the Labour MP for Barrow and Furness, John Woodcock, who argued that smaller lenders, including building societies, felt disproportionately penalised by the FSA’s proposals.
And the Conservative MP for Nuneaton, Marcus Jones, said responsible lending should not exclude more generous loan-to-value ratios for first-time buyers to improve their ability to get a mortgage.
Summing up, Mr Syms concluded:
“If we get it wrong, it will be disastrous, and we will all find people in our surgeries who cannot understand why a few years ago they got a mortgage and now they cannot.”
Replying to Mr Syms, Mr Hoban said it was important to address issues in the light of “the failed regulation of the mortgage market before the financial crisis.”
The minister said:
“The FSA is…committed to ensuring a smooth transitional period, to minimise the impact of changes and keep the mortgage and housing market stable. It has made it clear that it will not implement any rule changes until the market is back on a stronger footing.”
