MMR: Borrower responsibility matters

Lynda Blackwell, manager of the mortgage policy team at the FSA, said: “We always thought that consumer responsibility matters and we said that expressly in all the past papers.

“But one of the things that we have listened to the market on was in relation to the responsible lending proposals where there was a concern that we didn’t sufficiently flex expenditure proposals to recognise the fact that borrowers can flex their spending and do prioritise the mortgage.”

Mortgage industry pundits complained after the last Mortgage Market Review paper that the FSA proposals put all the onus on the lender to ensure mortgages were affordable and appropriate for the borrower without making the borrower responsible for their decision.

But Blackwell says that was not the intention and the shift towards recognising borrowers are responsible for ensuring their affordability even when their financial circumstances change shows this.

She added: “The feedback we had on the expenditure rules has resulted in less restrictive expenditure proposals in this paper. That was an area where we thought the feedback was really helpful to us.

“Generally speaking consumer responsibility is important to us and we’ve spoken about the work we’re doing with the Money Advice Service and on the financial capability side. That’s a longer term aim but nonetheless matters.”