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Current Issues
European Credit Directive
For many secured loan intermediaries, it can be a mammoth task keeping up with the requirements of UK regulation from the FSA and the OFT, but regulation does not stop here in the UK. AFB’s lobbying on behalf of it members is increasingly carried out at a European level as well as in the UK.
The influence of Europe over the regulation of financial services in the UK continues to increase as the European Commission pushes for further integration of financial markets across Europe. For AFB members, there are two European initiatives which could have a major effect on the regulation of secured loans in the UK.
The Mortgage White Paper is due to be published at the end of May 2007. It will cover all loans secured on property, affecting both first and second charge lending. An initial discussion paper, known as a ‘Green Paper’, was published and in 2005 and AFB’s sister trade body, the Association of Mortgage Intermediaries (AMI) submitted a response to this paper. Click here to read this response. The issues raised within this were compulsory advice; early repayment charges; calculation and disclosure of APR; and standardisation of mortgage contracts. Many industry participants have queried if there really is a need for any EU legislation in this area as they are not convinced that the internal market is failing and cannot see much demand for cross-border sales.
The Consumer Credit Directive (CCD) has been in place since 1987, and in 2002 a proposal was put forward by the Commission to update this to reflect the changes in the consumer credit market and expand the rules to facilitate integration of the consumer credit market across Europe.
The updated CCD originally included certain types of secured lending and AFB is following developments to this directive carefully to ensure that this remains the case. Although it currently excludes all loans secured on property, it does cover some important wider issues for intermediaries, such as the calculation of the APR, the definition of a credit intermediary, and the role of advice. All of these could affect the contents of the Mortgage Credit White Paper and consequently how secured lending is regulated at a European level in the future. AFB’s sister trade body, the Association of Mortgage Intermediaries (AMI) submitted a response to the consultation on the CCD. Click here to read this response.
AFB View
The willingness to regulate financial services at a European level cannot be ignored, and AFB will continue to lobby on behalf of members to ensure their interests are represented. These pages will be updated as and when developments occur.
FSA View
Read what the FSA have been saying about European mortgage regulation:
John Tiner’s speech at the European Mortgage Federation conference, November 2006.
FSA and HM Treasury joint response to the EU Commission questionnaire on Mortgage Credit.
Dan Water’s speech at the EU Commission Public Hearing on Mortgage Credit, December 2005.
FSA and HM Treasury joint response to the Mortgage Credit Green Paper, November 2005.