FSA recommendations not suitable for mortgage market

New mortgage industry regulations suggested by the financial services watchdog could do more harm than good, an industry association has claimed.

Last June the Financial Services Authority published a Retail Distribution Review (RDR) for the retail investment sector, but the Association of Mortgage Intermediaries (AMI) has reacted strongly to news that a similar set of proposals could be put forward for the mortgage market.

In a formal response to the RDR, the AMI argued that regulatory influence similar to that suggested by the FSA was unsuitable for the mortgage industry.

"The document highlights the unique and highly successful nature of the UK mortgage market and seeks to demonstrate the potentially undesirable consequences of RDR read-across," said AMI director, Richard Farr.

"AMI believes that solutions evolved for the investment market simply do not suit the distinctiveness of the mortgage market, and cautions that unintended consequences risk both destabilising and stifling innovation in the mortgage market."

Mortgage sales have been regulated by the FSA since October 2004, with all lending activity required to include specific details of main features of any loan.

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