Rethink EU disclosure – AMI

Rethink EU disclosure – AMI

The Association of Mortgage Intermediaries (AMI) has called on the Financial Conduct Authority (FCA) to change EU disclosure rules that could see lenders face less red tape than intermediaries.

Disclosure rules have changed following the implementation of the EU Mortgage Credit Directive on 21 March 2016.

Banks and building societies have seen the regulatory onus to disclose their terms and conditions and payment structures weaken under the directive.

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Under the Mortgage Market Review (MMR) rules they, like intermediaries, had to submit full disclosure to clients before conversations started.

In its quarterly bulletin, the AMI stated it was disappointed to see that the FCA had not chosen to require lenders to continue to adopt the same stance as brokers on this point.

It stated: “MMR was designed to level the playing field so that borrowers received a consistent level of service regardless of the path they chose to take when applying for a mortgage.

“We strongly urge the FCA to reconsider this rule and revert back to its much fairer and more robust disclosure rules under MMR. This is fairer to consumers on all levels.

The regulator declined to comment on this point, but in January it proposed handbook amendments to limit the changes being made to initial Mortgage Credit Directive disclosure requirements.

However, the Council of Mortgage Lenders (CML) said it was not clear there was any lack of level playing field between lenders and intermediaries.

A spokeswoman for the CML said that MCOB 4.4A.4 stated that the same rules applied to both lenders and brokers. She added: “What matters is that borrowers are clear about the scope and nature of the service being offered, whoever it is being offered by, and the rules seem clearly aimed at achieving this objective.”

Simon Gammon, managing partner at Knight Frank Finance, said the FCA had done little to challenge the Mortgage Credit Directive rules being transposed into the UK.

He added: “There seemed to be a broad acceptance that MMR would be over-ruled, which was hugely frustrating for many in the industry. You have to ask why they bothered, given they must have known this was on the way.”

He said most lenders were privately pleading for a period of calm in terms of regulation, as the seemingly constant rule changes had ultimately led to less time spent improving mortgage rates and services for borrowers.

Matt Connell, head of regulatory developments at Zurich UK Life, said it was likely the various EU-wide regulations would be used as bargaining chips by the Government.

He added: “I suspect many firms would quite like a reprieve from some of these rules, but the ability to passport into the EU is also important. Everything could be up for grabs. This would all be part of negotiations if we voted to leave.”