Mortgage and contactless rules could be shaken up under FCA plans
The plans outlined by the regulator could help homebuyers to secure a property.
Rules on mortgages and contactless payments could be shaken up as part of wider moves to boost economic growth.
The Financial Conduct Authority (FCA) is looking into simplifying mortgage rules, which could help homebuyers to secure a property.
It issued a letter in response to the Government on the steps it is taking, and those it could take, to support economic growth.
In the letter, FCA chief executive Nikhil Rathi said the regulator would: “Begin simplifying responsible lending and advice rules for mortgages, supporting home ownership and opening a discussion on the balance between access to lending and levels of defaults.”
The regulator said it would also work with the Government to remove “overlapping standards” such as the Mortgage Charter.
Many lenders signed up to the charter to help borrowers struggling with their repayments amid the higher mortgage rate environment, although banks and building societies were already offering various forms of support.
Mortgage lending rules were toughened after the 2008 financial crisis, to make sure there could be no return to irresponsible lending.
The letter also said that the regulator “could also remove the ?100 contactless limit, allowing firms and customers greater flexibility, drawing on US experience, and levelling the playing field with digital wallets”.
The contactless card payment limit has been raised several times over the years.
The FCA said another step it could take would be to set new digital service standards, for example requiring firms to accept electronic verification of death to speed up bereavement claims in insurance.
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It also wants to make it easier for businesses to start up and grow.
The regulator said it could indicate more frequently that “we are ‘minded to approve’ promising start-ups to help them secure funding”.
The regulator also said it wants to?work with the Treasury to create a legislative framework “that enables relevant firms to conduct limited regulated activities with streamlined conditions”.
Reviewing the mortgage lending rules would help with affordability issues, not just for first-time buyers but also those looking to move further up the housing ladder
Both the FCA and the Bank of England have rules covering mortgage lending.
Charles Roe, director of mortgages at banking and finance industry body UK Finance, said: “Reviewing the mortgage lending rules would help with affordability issues, not just for first-time buyers but also those looking to move further up the housing ladder.
“Banks will always lend responsibly but the current rules are restricting the number of people who can get a mortgage and so could be relaxed.”
Matt Smith, a mortgage expert at Rightmove said: “It is really encouraging that the market regulators are now considering what a review of mortgage affordability could look like. Regulatory change is what we’ve been calling for, as that is what is needed to truly impact home mover affordability, particularly for first-time buyers.
“We’ve seen some innovative products and schemes announced by lenders to try and do their bit to support home-buyers, but they need support from both the Government and regulators to really drive more options for people.”
But Rocio Concha, Which? Director of Policy and Advocacy, warned against viewing consumer protections as barriers to growth.
She said: “The Financial Conduct Authority and government are right to explore ways to boost economic growth, and Which? would never stand in the way of cutting unnecessary red tape. However, viewing consumer protections as a barrier to economic growth is misguided.
“Well designed regulations that empower consumers to switch from bad to good products and services which give them the confidence to try new products and services without the fear of being ripped off are essential to creating dynamic markets that reward investment and innovation.”