Regulation  

‘Challenges for UK as mortgage directive looms’

According to MEP Vicky Ford, the directive has been on a “bumpy road to broadly the right outcome” but there may be more challenges for UK firms and consumers posed by future interventions from Europe.

Ms Ford, questioned whether it was necessary for the European Union to try to harmonise every member state’s mortgage market.

She said: “Many of us question whether we needed legislation at a European level. I do not think that regulating mortgage markets is a European competency. I want to see responsible lending but don’t think this can be achieved through trying to uphold pan-European standards or by encouraging a European market.

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“Fundamentally the EU should not try to harmonise mortgage markets when countries have such different property markets. Instead of clunky legislation, problems could have been dealt with by a few amendments to existing consumer credit and banking laws.”

The UK mortgage market was recently overhauled by the FSA in the form of the Mortgage Market Review, following a review in 2009, and the final rules were issued in October 2012.

When asked whether there was a risk that the UK might end up gold-plating some of the EU’s proposals, the FCA declined to comment.

Adviser view

Robert Sinclair, chief executive of the Association of Mortgage Intermediaries, said: “Some proposals in the draft directive might not serve UK consumers as well as the MMR. It might be harder for shoppers to shop around and for brokers to do their job properly.”

He added: “Technically there could be ‘gold-plating’ to ensure consumers get the best deal.”

The EU proposal aims to:

* Create new professional standards for mortgage lenders.

* Boost competition.

* Set a framework for a European-wide mortgage market.

* Enable consumers to obtain mortgages from lenders in other countries.

* Ensure clearer communications to consumers about risk, costs and suitability.