In the ‘UK Response to the Commission Questionnaire on Mortgage Credit in the EU’, commissioned by the FSA and HM Treasury, one section deals with the UK’s attitudes towards the merits of APR.
The document stated: “Existing EU legislation already provides a standard basis for the APR calculation. This should be as similar as possible for consumer credit and mortgages. This approach has two advantages: firstly, consumers are provided with a yardstick by which to compare secured and unsecured credit meeting the same purpose; and second, the costs are minimised for firms active in both markets.”
This support for APR has been attacked by brokers, who claim the report does not represent the views of the industry.
Danny Lovey, sole trader at the Mortgage Practitioner, said: “Someone is writing about mortgages who doesn’t have their finger on the button. Who, if anyone, in the industry was consulted? If they had consulted someone, the concerns about APR would have been raised.”
Jonathan Cornell, technical director at Hamptons International Mortgages, commented: “I support the concept of APR for loans as you stay on the same rate all the way through, but with mortgages there are so many variables. I’m disappointed if the chance was there to put across our views to Europe on APR as no one seems to have listened to the broker market.”
Robin Gordon-Walker, spokesperson for the FSA, said: “This was a special exercise where there were specific questions to which we replied. The views of industry were welcome but it wasn’t the occasion for us to change the way APR is used.
“We are publishing a review of the MCOB rules at the end of September and if there are any rules which are not working how they were envisaged at the introduction of regulation, we can look at changing them.”
