The EU commissioner for the internal market and services said member states had approved changes and the directive could now progress.
He said: “The directive will put an end to excesses, foster responsible lending practices and consumers will finally get the protection they deserve.”
The first draft of the proposed directive was published in March 2011 and it has been the subject of long-standing negotiations and consultation across Europe. Many industry bodies in the UK and the eurozone pushed to remove certain elements that might conflict with existing mortgage regulations.
The refined measures, as proposed in 2011, aim to:
■ Create new professional standards for mortgage lenders.
■ Boost competition.
■ Set a framework for a European-wide mortgage market.
■ Enable 500m consumers to use a ‘passport and obtain mortgages from lenders in other countries.
■ Ensure better, clearer communications to consumers about risk, costs and suitability.
A spokesman for the Financial Conduct Authority said the proposed rules would sit alongside consumer protection measures due to be introduced in 2014 as part of its mortgage market review, and the new rules were unlikely to cause problems for domestic lenders.
Paul Smee, director general of the Council of Mortgage Lenders, said: “The government, FCA and the industry have worked positively together to ensure the new rules will broadly suit the UK mortgage market and appear unlikely to cause problems for lenders.
“There will inevitably be additional work for both regulators and lenders to ensure that the requirements are fully reflected in UK rules, especially as they come hot on the heels of the implementation of the FCA’s new domestic requirements for mortgages.”
UK customers already receive significant consumer protection and information under the FCA’s regulatory regime, but Mr Smee welcomed the fact that in other member states the changes would “result in increased protection and greater consistency”.
Next Steps
To take effect the new rules must be approved by the EU parliament and endorsed by the member states.
A plenary vote will be held in the EU parliament on Tuesday 11 June.
Adviser view:
David Hollingworth, communications manager for London-based mortgage brokers London & Country, said: “It was important that the directive carved out some of the initial blanket proposals, such as the one that drew buy-to-let into the same regulatory camp as owner-occupiers.
“It was also important for the UK to promote the work done under MMR, such as the key facts illustrations that we now use, so rather than having to implement a new European document that will supercede the key facts illustrations, there will be no duplication or gold-plating.”
He said brokers generally would welcome the overall thrust of the directive and the better consumer protection, but added: “There had been a fear the EU directive would end up gold-plating the FCA’s work on the MMR. However it appears that lobbying has taken out those elements that would have ushered in duplication or gold-plating or unintended consequences which is to be welcomed.
“Clearly we already operate in a tightly-regulated market so the last thing we need is duplication.”
