Regulation  

EU mortgage directive is a backward step, says Brown

The managing director of London-based independent mortgage adviser Moneysprite, said while the aims of the MMR were “laudable and should be welcomed with open arms”, the next swathe of regulation out of Brussels would only add to confusion.

Mr Brown said the MMR, which comes into force this April, would help to ensure mortgages are affordable, now and in the future, and avoid risky lending that might cause market instability.

He said MMR might mean advice would become uneconomic for those with difficult cases, lower incomes or smaller borrowing requirements, but he was far more worried about the effect of the 2015 EU Mortgage Credit Directive.

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He said: “This is seen as a layer of regulation that will add little, bar confusion and cost, to the process. With MMR already offering better regulation and more safeguards, it is unlikely that another round of adjusted processes will add any benefit.

“The FCA appears to have listened to the industry about information overload and the removal of IDDs, and more focused illustrations have been welcomed. To replace this with multiple APRs and a European standardised information sheet appears folly, and a totally backwards step.”

Last year, Robert Sinclair, director general of the Association of Mortgage Intermediaries, told a conference in London that the directive could force some lenders and advisers to conduct another sea change in their processes, and would mean an increase in paperwork.

A spokesman for the FCA said: “We are well placed to implement the directive while minimising further regulatory change. We will consult as soon as possible so firms know what to expect.”

European view

Chantal Hughes, EU Commission spokesman for internal market and services, said: “The new directive is about protecting consumers. Burdens should not be excessive, it is simply about ensuring that consumers know what risks they are taking when they take out a mortgage, usually the biggest financial transaction in someone’s life. All member states will need to be careful about limiting burdens in the implementation process.”