IN A RECENT speech Patricia Hewitt, Economic Secretary to the Treasury, said the Government would for the time being continue to allow mortgage lenders to escape statutory regulation and instead be governed by a voluntary code of conduct. She added, however, that because a mortgage is the biggest financial transaction of a lifetime for most people, there were serious concerns and that the position would be reviewed later this year. In other words, building societies are drinking at last chance saloon.
The Skipton Building Society's decision to stick two fingers up at the code of conduct, reject the Ombudsman's findings, and refuse to pay his prescribed compensation, pretty much guarantees that this review is going to be a hostile one. Given the sums involved, which are paltry, this was a particularly stupid and naive thing for the Skipton to have done, even though it plainly believes right is on its side.
The upshot is that the Skipton has spoilt it for everyone. Building societies will find themselves annexed to the fast growing empire of the Financial Services Authority along with everyone else. This is unlikely to be a good thing in the long run from anyone's point of view.
There are a lot of mis-sold mortgages; what's more, the complexity and variety of products now on offer means the degree of mis selling is on the increase. On the other hand, the red tape and costs of complying with statutory regulation will almost certainly damage what is at present a vibrantly competitive market place working to the general benefit of all.
Some people will gain, and there will be greater protection from sharp practice. But the cost of a mortgage will generally rise. Silly, self-righteous, little Skipton.Reuse content