Published: 14 June 2012 | Author: Bernard Clarke
UK lenders have made welcome progress on the final shape of the proposed mortgage directive following a recent vote by the European Parliament.
The vote by the Parliament’s economic and monetary affairs (ECON) committee backed the UK’s stance on buy-to-let lending, which we believe should be excluded from the scope of the proposed directive. The committee also supported a measure that could mean that UK lenders are able to continue using existing paperwork for disclosing details of mortgage products to consumers – the "key facts" illustration – for another five years.
The UK’s position was supported by members of the ECON committee when they finally voted last week on their amendments to the proposed European directive on credit agreements relating to residential property (CARRP). But the vote was only a stage in a process that is still far from complete.
After the summer, discussions are likely to begin on the different versions of the proposed directive that have been produced by the European Parliament, Council and Commission – a process that has been referred to as a "trialogue," a debate between the three bodies. A final draft of the directive will not emerge until those discussions have been completed.
The ECON vote was, however, a welcome endorsement of the UK’s position, on which the CML has lobbied strongly, along with the Treasury, the Financial Services Authority and UK members of the European Parliament (MEPs).
We have argued consistently that buy-to-let loans – products intended for property investors – should not be subject to the same disclosure and other regulatory requirements intended to provide protection for consumers taking out mainstream mortgage products. The ECON committee agreed, voting that individual member states should decide whether the directive should apply in cases where it is not intended that the property is to be occupied by the borrower or a related person.
The committee also voted that individual countries should be able to keep their existing product disclosure paperwork before being required to introduce the European standardised information sheet within five years, allowing more time for a transition from the "key facts" illustration.
While we welcome the ECON committee’s stance, we are, of course, still far from certain that the final version of the CARRP will reflect the UK’s views on product disclosure and buy-to-let lending. We are also concerned about the ambiguous wording of proposed rules linking savings accounts to mortgages. We want to try to ensure that these do not affect those guarantor mortgages which potentially enable a first-time buyer to get a loan partly secured by the savings of his or her parents in an account held with the same firm.
We also want clarity on the ECON committee’s views on rates charged by lenders that are not linked to external indices, like the Bank of England base rate. Lenders in the UK want to be able to continue to operate independent standard variable rates, which are often a key feature of the product range of individual firms.
We will continue to represent the views of the UK lenders, working alongside other national representative bodies and MEPs, as work on the proposed directive progresses.