The Financial Conduct Authority has urged the mortgage industry to maintain its risk standards and resist falling back into old bad habits.
Lynda Blackwell, mortgage sector manager at the regulator, who was at the Financial Services Expo Midlands event in Coventry today, told brokers that credit risk standards are holding up – for now.
She said: “Risk taking is credible but we must all do our bit to make sure those strong credit practices are maintained and we do not repeat the mistakes of the past.
“The market is still fairly subdued at the moment. Mortgage activity is still considerably below trend and we’re still dealing with the legacy issues of the past.”
Blackwell said the FCA is worried about a growing appetite from both lenders and intermediaries to move into “high-risk sectors”.
This could happen, she added, because of the number of lenders compared to the volume of business and the drop in buy-to-let activity.
She suggested intermediaries have a greater responsibility in product sectors where they account for the majority of sales, for example, intermediaries account for 68% of all credit impaired mortgage sales and 73% of debt consolidation loans.
In terms of debt consolidation, Blackwell added: “Sales have been picking up recently from their 2010 low point and we are watching this very carefully.
“Intermediaries drive this business with 73% of sales and are therefore in a very responsible position.”
FSE Midlands took place for the first time at the Ricoh Arena in Coventry today.