Swiss financial markets regulator Finma is not planning to loosen mortgage lending directives, according to its director Thomas Bauer, after the bank Raiffeisen expressed a desire for looser lending rules.
In an interview with Zentralschweiz am Sonntag, Bauer said that this could allow certain households to get mortgages that they wouldn’t be able to service over the long term.
In 2014, Finma put pressure on banks to increase the hurdles to getting a mortgage. The resulting self-regulation by banks on lending has reduced access to the Swiss real estate market.
Raiffeisen boss, Patrik Gisel, recently expressed a desire to see a softening of these directives. He says they are too cautious and discriminate against young people.
Bauer spoke of the possibility of fines for non-compliance. Currently, the financial watchdog can only impose accounting changes or place limits on certain activities. Although in serious cases, Finma can take away a bank’s licence. At the same time, he is skeptical of the impact of fines. “They are paid by companies and shareholders, not by the people responsible for the mistakes.” In addition, imposing and collecting them would be complicated. And after the associated costs there would probably be little left to collect.