BSA: EU mortgage lending Directive

BSA: EU mortgage lending Directive

BSA: EU mortgage lending Directive

The European Commission has today published its long awaited proposal for a Directive on mortgage lending. The draft Directive credit agreements relating to residential property sets out proposals aimed at creating an efficient and competitive single market.

The BSA does not believe that the case for EU intervention has been convincingly made. A single rulebook for mortgage lending is inappropriate given the diverse markets, cultures and regulatory frameworks in place across the EU. There is a risk that with these proposals the Commission is seeking to design a European solution to a US problem.

The scope of the proposal includes pre-contractual disclosure, advice, creditworthiness assessments and early repayment provisions. This includes a proposal for a European Standardised Information Sheet (ESIS) that could replace the Key Facts Illustration provided to mortgage customers in the UK currently. Since UK mortgage lenders are subject to parallel regulatory intervention at both national and European level there is a risk that this draft Directive could conflict with the FSA proposals expected to be published in the summer.
Paul Broadhead, Head of Mortgage Policy at the BSA said:-

“The requirement for a European Standardised Information Sheet, with prescribed content and layout could burden the industry with costs running into tens of millions of pounds. This is unlikely to deliver any benefit to UK consumers as they will receive less information than they currently receive through the KFI.

“Now that the draft Directive is published it is vital that the FSA pays close attention to its effect on the mortgage market review (MMR). The summer consultation will need to incorporate the European dimension if it is to include a full and robust impact assessment.”

~Ends~

Notes to Editors

1. The Directive can be viewed here –

2. The Building Societies Association (BSA) represents mutual lenders and deposit takers in the UK including all 48 UK building societies. Mutual lenders and deposit takers have total assets of over £365 billion and, together with their subsidiaries, hold residential mortgages of almost £235 billion, 19% of the total outstanding in the UK. They hold more than £245 billion of retail deposits, accounting for 22% of all such deposits in the UK. Mutual deposit takers account for about 36% of cash ISA balances. They employ approximately 50,000 full and part-time staff and operate through approximately 2,000 branches.

3. Photographs of Paul Broadhead are available from the BSA press office, or from the Association’s website at www.bsa.org.uk or Headlinemoney www.headlinemoney.co.uk

4. Contact – Fiona Cornes,

5.

Katie Wise (nee Errington)
Policy and External Affairs Officer
Building Societies Association
6th Floor, York House
23 Kingsway
London
WC2B 6UJ

Tel: 020 7520 5904
Fax: 020 7240 5290
Email: katie.wise@bsa.org.uk
Web: www.bsa.org.uk

Join us at the BSA Annual Conference in Birmingham, 4 & 5 May 2011.
www.bsaconference.org