FSA chief executive Hector Sants has revealed that the regulator will publish its proposed framework for the Mortgage Market Review (MMR) in autumn 2011, with no rule changes due before 2012.
Speaking to the British Bankers' Association conference, Sants said that the FSA will publish a full impact analysis of the MMR this summer that will consider both the conduct and prudential perspectives.
Discussing the formation of the FSA's replacement, the Financial Conduct Authority, Hants said it will continue initiatives including the MMR and RDR.
He said: "The MMR is still at the stage of analysis. I am sure we all recognise the market place did not function well in the decade prior to 2007. Credit expanded by 200%, but there was no consequent rise in the percentage of homeownership, nor was there an increase in first time buying.
"We do, however, recognise the sensitivity of the interaction between our actions and the public policy agenda."
"Our goal will be to reduce the possibility of consumer detriment in relation to affordability occurring without impacting the ability of the market place to offer affordable mortgages," Sants said.
While acknowledging that the RDR will involved significant change to the industry, he said "the final outcome will be a much improved market place".
In addition, Sants told delegates that the new regulator would continue the FSA's aim of delivering "‘credible deterrence' and effective redress" with its fining regime and strengthened ability to seek consumer redress.
Sants said: "The FCA will build upon the FSA's new proactive consumer protection strategy, launched in March 2010. However, to succeed the FCA will also need new and stronger powers to be granted by Parliament."
He said that the FCA's strategy would be based on a proactive and intensive approach, made up of four key elements:
- Addressing structural deficiencies in financial sectors that affect consumer choice and experience
- Intensive supervision to ensure firms are treating customers fairly, focusing on point of sale practices, product manufacturing frameworks and firms' governance and culture
- Product-based interventions, when its analysis shows the product is likely to cause more harm than benefit
- Ensuring that when a firm fails, appropriate redress and compensation is achieved, and where necessary taking action against firms and individuals to deliver effective credible deterrence
However, he highlighted that the FCA will not be a ‘no failure' institution.
Sants said: "The regulatory reform programme presents us with the unique opportunity to make changes to financial regulation to deliver real benefits to society."
He added: "Good outcomes for society from regulation are less dependent on structure than the underlying regulatory philosophy and the quality of the judgements made. As we move through the transition period, I can assure you that the FSA's staff will remain focused on the quality of our judgements and that this culture will be taken forward to the successor bodies."
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