Excessive Eu Regualtion Unites The Uk Mortgage Industry And Fsa To Oppose The Damage It Will Cause

The Council of Mortgage Lenders has recently supported plans by the Financial Services Authority to avoid the UK's commercial market from having to adhere to a set of European rules governing the European commercial property market.

Prime Minister David Cameron and the Government oppose additional regulations in the industry and this stance is being supported by the Financial Services Authority an organisation that narrowly escaped the recent coalition spending cuts.

This change of heart has resulted in a decision to oppose new rules introduced at Brussels, designed to harmonise and standardise mortgage lending across the EU member states. Campaigners against these measures claim that because housing markets differ substantially across the EU member states, the regulations that apply in Germany or Spain may not make any sense in the UK.

The Council of Mortgage Lenders, the UK's leading association of lending professionals, agrees with the FSA on this issue, pointing out that the UK commercial property market is still stuck in a state of recession. Current mortgage approvals are at their lowest rate in years. The vast acreage of empty or partially occupied shopping arcades and centres, retail and business parks and office blocks across the UK bear out this sorry fact.

The concern is that imposing additional red tape to an industry which is already struggling may damage any commercial property recovery. Lenders need flexibility and autonomy in agreeing lending, particularly in a difficult economic environment.

But in spite of the news that the FSA are not backing EU wide regulation, this does not mean that commercial property market will be unregulated. They have spoken out to say that it remains an important factor to ensure that consumers, commercial landlords and everybody involved in the sector has rights.

The FSA is actually in the middle of a consultation and review process regarding tweaking the property market's regulation. After the large boom and bust we have seen in the last decade, more regulation from the FSA or its successor agency was always going to be a given.

It seems likely already that bridging loans and short term loans calculated from the value of commercial property will see a tightening of regulation. Short term lending is at the thin end of the wedge, the most risky and volatile so closer inspection and tighter criteria are inevitable.

The FSA's quiet and measured approach has actually won over many fans in the industry, not least because they are open to ideas and listening to those in the industry about what needs tinkering with. You will not find many sectors where those in the industry are happy and optimistic about the regulators reviews and actions, it seems the 'attract more bees with honey' tactic is working a treat.

By listening to the worries and concerns of British lenders, the FSA is helping the commercial mortgage market in 2011. Not only does the watchdog oppose the EU plans to regulate the lending market but they are also prepared to introduce their own legislation following full and fair consultation with lenders. Rather than a blanket EU policy which may not be suitable to the UK market, the FSA is trying to come up with a local solution that benefits everyone.