Afme acts to protect market from FCA review

The Association for Financial Markets in Europe (Afme) is preparing a response to the UK Financial Conduct Authority’s mortgage market consultation, to try to ensure that rules intended to help ‘mortgage prisoners’ do not hurt the broader UK securitization market.

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UK legacy mortgage deals have been some of the biggest business opportunities for European securitization in recent years — but the borrowers underlying the deals have been stymied by government rule changes. They cannot refinance onto new, cheaper fixed rate deals because they cannot meet the strict affordability criteria that came in during 2014.

The government has been trying to tweak rules to help them, without diluting the affordability rules, but proposals from some members of parliament, such as Charlie Elphicke, who represents Dover for the Conservatives, could hurt securitization markets by prohibiting the transfer of mortgages to non-banks.

Irish politicians, especially from the opposition Sinn Fein party, have brought forward similar proposals, aimed at stopping “vulture funds” from buying Irish consumer portfolios.

Afme is mainly focused on wholesale market regulation, and rarely comments on retail matters, but is submitting a short response to the FCA to make sure any changes do not damage securitization, according to the group’s head of fixed income Richard Hopkin.

Kevin Ingram, head of securitisation at Clifford Chance, said that the new Securitisation Regulation, which came into force this year, had helped to improve politicians’ views of the market, and therefore to protect it from any further adverse regulation.

“The key part is, and Ireland is a good example of this, to make sure people are aware that there could be an issue, and to make sure it’s thought about,” said Ingram.