The European Commission’s Green Paper entitled ‘Mortgage Credit in the EU’ seeks to assess the pros and cons of Commission intervention in the EU residential mortgage market.
Currently in the UK, all second charge loans come under the responsibility of the Consumer Credit Act, not the FSA. However, the EU Green Paper includes reference to all mortgages, first and second charge on land, posing the fear that the FSA would be forced to regulate both first and second charge loans if recommendations in the EU paper are passed.
Stephen Atkins, group compliance director at Freedom Finance, said: “The FSA acts on the instruction of the Treasury. At the moment the FSA has not been told by the Treasury to take on regulation of second charge loans.
“But with this Green Paper, it may have to be considered. We’ll have to wait and see if we can ward off the EU taking charge, otherwise it will mean another load of regulation on our hands.”
The recent Hampton Report also suggested that the FSA should take over responsibility for all Consumer Credit Act borrowing but the FSA had said this would be a huge task.
The Council of Mortgage Lenders has also voiced its concerns about the EU Green Paper, warning that it is ‘heading in the wrong direction’. It said: “From a UK perspective, the paper places too much emphasis on retail standardisation and regulation of mortgage information and advice. The Green Paper is missing the point.
“It is far more important for lenders to be able to set up operations in other member states, through mergers, joint ventures or subsidiaries, and this should be the aim of the Commission.”
