This is that claim from the Council of Mortgage Lenders in response to a new report from the Economic and Monetary affairs committee of the European Parliament ECON.
The CML said the report, written by the lead on European mortgage regulation Spanish MEP Antolin Sanchez Presedo, gave little apparent acknowledgement of the potentially damaging impact of the proposals.
It said the ECON report represented a significant move away from the balanced approach to responsibilities for both lenders and borrowers. Instead the report proposes a range of measures that seek to offer total protection for consumers but the CML said this could unwittingly harm consumers.
The proposed measures include the abolition of ERCS as well as the introduction of a “cooling-off” period for borrowers of at least 14 working days after a mortgage offer has been made.
They also suggest compensation should be paid to consumers if credit is rejected because a reference agency supplies an inaccurate report and a ban on arrears charges if payment problems arise that are beyond the control of the borrower.
The CML believes that many of the proposals would have widespread unintended consequences and that their effects had not been properly assessed.
Their concerns included the proposals to make overpayments and underpayments a standard feature of mortgages.
The CML said: “While some UK loans allow this option, many do not, and introducing it across the board imposes on firms costs and uncertainty associated with the prepayment of loans and future options for borrowers to draw down overpayments. That could make all mortgages more expensive for borrowers.”
The trade body was also concerned over the measures that would restrict arrears charges in the way proposed or reinforce mandatory “cooling-off” periods.
The CML continued: “These would also impose cost and uncertainty on firms, and may make it more difficult for higher-risk customers to obtain mortgage finance.
“As with some of the proposals for regulatory reform proposed by the Financial Services Authority in the UK, measures seeking to protect consumers may not be in their wider interests if they result in exclusion from the market for large numbers of customers.
“Additionally, all customers could face higher costs to cover the provision of measures that are used only by a few.”
The CML concluded by saying: “We believe that the ECON report takes proposals for European regulation in an unexpected direction which is inappropriate to the needs of consumers and firms that continue to operate essentially in separate markets.
“As we move into the autumn we will be working with lenders and other interested parties in the UK and Europe to seek to ensure that European regulatory proposals are appropriate to the needs of firms and consumers in different countries.
“We will also be arguing that any new measures should be proportionate and justified by cost-benefit and impact analysis.”
