Housing: Shared Ownership

Lord Forsyth of Drumlean Excerpts

Monday 25th October 2010 Lords Chamber

[Lord Sassoon]

Well, my Lords, the FSA, and what my noble friend has reported it as saying, must stand for themselves. I cannot directly answer for the FSA. However, my clear understanding is that the source book offers guidance on the way that the FSA undertakes its regulation and does not consist of formal rules. Indeed, for those societies with advanced risk management systems, there is not even an indicative limit on the level of shared ownership in which they can engage. As I understand it, building societies can lend within their statutory limits. They can undertake any lending up to their statutory limits provided they have appropriate controls in place.

[Lord Forsyth of Drumlean]

My Lords, given that the sub-prime crisis in the United States was caused in the first place by government interference requiring lenders to lend money in an unsafe way, should we not be very wary about interfering in the lending decisions of building societies or others, however important the social issues are?

[Lord Sassoon]

My Lords, the Government want to have a sustainable mortgage market in this country, and that requires a balance in maintaining a flow of mortgages so that people can get on to the housing ladder. In that regard, the actions which the Government have taken to ensure that market interest rates are kept low are paramount. On the other hand, we want to ensure that mortgage providers lend responsibly. That is why the Financial Services Authority is conducting a mortgage market review and why in July it issued a responsible lending paper for consultation.