The FSA needs to make clear whether it refers to lenders, intermediaries or both when communicating messages about the performance of firms, according to the Council of Mortgage Lenders (CML).
In its annual report, published today,the CML calls on the FSA to be clearer about which firms it is targeting and adds poor practice by some intermediary firms can undermine the reputation of good firms and the wider industry.
The report also revealed mortgage lenders lent £1bn every day during 2007 despite a major slowdown in September caused by the credit crunch and the failure of Northern Rock.
The report says it is important for lenders, the authorities and the general public to see the true strength of the mortgage market despite intense media scrutiny in recent months.
A record £364bn of mortgages was lent last year in the UK, according to the CML, a rise of 6% from the £345bn seen in 2006.
Six of the first seven months of 2007 saw record lending figures as the mortgage and housing markets approached the end of a decade of strong growth.
The CML says media coverage of the mortgage industry was at its most intense for two decades in 2007 and varied widely from highly positive stories of growth in the early part of the year to the devastating effects of the credit crunch from the late summer onwards.
It also claims it was keen to work with the Government on meeting its home ownership objectives in 2007, but says development and implementation of policy was sometimes disappointing, such as HIPs, complex shared ownership schemes, stamp duty and income support for mortgage interest.
The report criticised the Government for taking advantage of significant growth in tax revenue from home-ownership, which the CML says is in conflict with its desire to expand owner-occupation and access for first-time-buyers.
The report also reveals the CML has become less favourable with MPs, particularly those in opposition, with just 46% saying they took a favourable view to the CML, compared with 54% in 2006. The CML says this is most likely due to growing concern on a range of housing issues and concerns about debt.
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