‘We need to simplify mortgage products’

Speech: Martijn Van der Heijden
Speech: Martijn Van der Heijden
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Lenders should simplify their product ranges in an effort to rebuild customer trust, the head of the Council of Mortgage Lenders (CML) has urged.

Martijn Van der Heijden called for more flexible products and less jargon as part of a drive to show customers they were “genuinely at the heart of our businesses”.

He was speaking at a CML conference after toughened rules were recently outlined by the City regulator to prevent a return to irresponsible lending and to make sure people only took out mortgages they could afford to pay back.

Martin Wheatley, chief executive-designate of the new Financial Conduct Authority (FCA), told the conference that larger lenders who had previously built a “one-size-fits-all” approach would have to change their ways.

He said: “I think this is a good thing... lending should be about building a relationship with your customers, not just performing a transaction.”

Mr Wheatley said that the drive to promote more effective competition did not necessarily mean having more firms in the market.

He said: “In the mortgage market at its peak there was lots of competition, but can we actually say that it was effective and good for the consumer?

“In fact, it is probably right to say there were too many lenders, too many products and that standards were dragged down.”

Mr Van der Heijden suggested that lenders should move towards introducing simplified ranges, with fewer mortgage products which also have greater flexibility built into them.

He said lenders should also innovate to make the process of taking out a deal easier and quicker, with “less paper” and “less jargon”.

Mr Van der Heijden said: “We know – pretty much – that we have further work to do to develop a relationship of trust with our existing borrowers and with the borrowers of the future, many of whom – rightly or wrongly – see us as the cause of problems rather than the providers of solutions.”

He said lenders should also show themselves capable of self-restraint.

At the height of the housing boom, they lost sight of “some of the basics” as they competed to grow their market shares, he said.

“Too often we have waited for regulators to control unwise lending rather than take matters into our own hands; and too often we have let the actions of a few spoil the reputation and market health for us all,” he said.

“This is our business, and we have to run it.”

He said: “We are ready to move on, to build that successful market of the future.”

Mr Van der Heijden pointed out that lenders had helped one million households to get on the property ladder since the credit crunch started, showing how they had kept themselves “open for business”.

He hit back at criticism of lenders amid the subdued market conditions, saying that around one in 10 families who currently had a mortgage only became homeowners after the credit crunch started.

He also said that lending to home buyers was set to be around 15% higher this year than the CML had previously predicted and was likely to reach £79bn, despite the tough economy.