The BSA said 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 Financial Services Authority 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. The summer consultation will need to incorporate the European dimension if it is to include a full and robust impact assessment."
