News Review: Regulation


European directive is badly timed


by John Heron, chairman, Intermediary Mortgage Lenders Association


The European Commission


either has a very poor sense of timing or a sick sense of humour. The launch of its mortgage market directive comes at a time when we are still tackling major domestic regulatory issues, such as the Mortgage Market Review, and lenders and intermediaries are no doubt feeling regulatory fatigue. As the industry just begins


to fi nd its feet after the worst economic meltdown for nearly 100 years, intermediaries and lenders fi nd themselves having to interpret and potentially implement another new set of costly regulations. There are many areas of concerns hidden within this Directive, but it has the potential to turn how we deliver mortgage advice and sales to consumers on its head. For example, under the proposals mortgage brokers must have a clean police record, should not be declared bankrupt, ensure they have professional indemnity and will need to be authorised and monitored by the member state. This is laudable and sensible


and most of the conditions currently apply to UK brokers. However, as currently interpreted lenders’ branch- based staff will not have to meet the same requirements, regardless of whether they are classed as giving advice. Indeed, it has been suggested


that the Directive will prevent lenders’ branch-based staff giving consumers advice at all. Article 17 of the Directive


requires somebody giving advice to consider a “suffi ciently large number of credit agreements available on the market”. One has to question whether a lender offering its own products would meet this requirement. IMLA obviously advocates


the use and benefi ts of mortgage intermediaries in the sales process but recognises the importance of advice to consumers regardless of channels. If both intermediary and direct channels are diminished by this Directive then the consumer is the loser. The UK mortgage market


has its faults but it is perhaps the most innovative and competitive of all of the EU member states. We already provide much of what this Directive is asking us to do, and in most cases to a higher standard. The issue I’ve raised just


scratch the surface of the Directive. Attempting to harmonise lending processes across different member states is a ridiculous objective given the different legal systems, cultures, housing markets to name a few and it could prove to be a costly mess of regulatory layering. Attempting to harmonise


lending processes across different member states is a ridiculous objective given the different legal systems, cultures, housing markets to name a few and it could prove to be a costly mess of regulatory layering.


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