El rol de la cultura en la teoría de la autodeterminación

The FSA/FCA’s approach to the MMR has been to ensure consumer protection with a form of “anticipatory” regulation. However, it is unlikely to suppress demand and it is likely that market pressures and the demand for credit to finance home purchases will put pressures elsewhere in the system. Moreover, regulation needs to be integrated into wider

policymaking. At the heart of the problem is the failure in the UK to build sufficient housing to meet anything approaching the level of demand. The issue of housing supply is central to financial regulation in this area and is considered in chapter 8. In addition, there are possible lessons from the US and the next chapter looks at developing the US concept of the “qualified mortgage” and other options such as the “unitised mortgage” where the home is bought in incremental steps without the need to take on excessive debt at the out- set. 161

4.14 Conclusion

In the UK for the last ten or more years, the financial position of mortgagees has been relatively benign. Interest rates have been very low, in most areas house prices have risen and employment levels, even during the financial crisis have remained strong. However, 162 under different economic conditions, for example, closer to those experienced in the early 1990s, the effects on borrowers and hence the economy, as a whole, could be very

Directive 2015/2366 dated 25th November 2015 on payment services in the internal market

159

FCA’s web-site, ‘Financial Conduct Authority provides update on regulatory sandbox’, (accessed 15th

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June 2017)

Chapt 3, n22, (House of debt), 218

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Interest rate, employment levels and house prices

severe. Mortgage conduct of business regulation has an important role to play in

ensuring the provision of meaningful information to prospective borrowers and in ensuring that marketing is fair, clear and not misleading. In addition, conduct of business regulation can help mould the approach taken by both lenders and intermediaries towards protecting consumers (eg the setting of targets and incentives, product design etc).Central to the regulations introduced in 2014 the affordability test seeks to protect consumers from over- borrowing. It adopts a paternalistic point of view aimed at protecting consumers from themselves.

This may have a number of possible effects. For example, as evidenced by the FCA’s thematic review in 2015,as an unfulfilled demand for mortgages builds up the result may be that many consumers in their desperation to achieve a home of their own may be driven to fabricate or conceal information to be able to demonstrate that they can afford the loan they seek. 163

Second, mortgage conduct of business regulations have socio-economic implications. For example, homeownership and the aspiration of homeownership has a spiritual attraction. It provides an element of social stability with the homeowner having a financial stake in the well-being of the country and can embed them in the community. It has helped engender a willingness to save for the future if only to ensure that the outstanding mortgage is finally paid-off and many see the home as a method of saving for retirement. Much of this can be summarised in the phrase that the home forms both the major portion of a households “store of wealth” and a repository of hope for the future. The possession of the home may help ensure a good school and future career for the children; it may help provide for a comfortable retirement and may assist the next generation forming their own household and buying their own home in years to come. It demonstrates a firm belief in the future and a level of continuity and prosperity. The mortgage conduct of business regulations do not seek to address these concerns. The UK’s FCA has consumer protection as one of its statutory objectives but this is not balanced by any need to consider the long-term socio- economic implications of its actions. The latter has a strong political dimension but ministers and the departments of state have tended to regard UK financial services

regulation as a technical matter best left to the experts within the FCA. This demonstrates

Supra, note 35, (FCA Thematic review, 2015). For example, Evening Standard, ‘Trapped in a mortgage

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cage’, (13th October 2015), reports a survey by uSwitch that a quarter of of young female borrowers “lied about plans to start a family” for fear of having their application rejected

a failure to grasp the strategic issues binding regulation with socio-economic policy. More work is needed to see how consumer protection in the mortgage market, in the face of potentially very powerful market forces, can best operate taking account of socio-economic concerns.

Third, UK regulators have failed to consider the full implications of the new regulations. The all-encompassing rules will be breached at some point. Due to the sums involved mortgage remediation costs could potentially run into the tens of billions of pounds. This 164 could destroy the capital of lenders, forcing them into regulatory resolution with the

possibility of taxpayer support.

Finally, it should be possible to redirect and target conduct of business mortgage

regulation so that it better protects consumers but at the same time works with the grain of the socio-economic housing policy. This could include better targeted regulation since the assessment of mortgage affordability should lend itself to financial technology

developments. The regulator could also look at US policy and the “qualified mortgage” concept considered in the next chapter. This should be an area for regulatory leadership. However, this aspect has not been prioritised.

In 2015 household total debt in the UK (of which 80% related to mortgage borrowing was 139% of

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disposable income. This compares with equivalent figures in Spain of 120% and 115% in the US, Bank of England, ‘UK Housing Market Report’, (2015). The total value of all UK mortgages outstanding at the end of December 2015 was £1,282 Bn, (Bank of England and FCA Mortgage Lenders and Administrators Statistics for Q3 2015)

CHAPTER 5

Lessons from US mortgage conduct of