Proposals from the European Commission for changes to the regulation of mortgage markets across EU Member States are inappropriate at this time and would be ill-suited to the UK because its mortgage market is so distinct. The House of Lords EU Committee has written to the Financial Secretary to the Treasury, Mark Hoban MP, to highlight concerns that the Committee has following its scrutiny of the draft directive on residential property.
The Committee took evidence from organisations including the Council of Mortgage Lenders, Which? and the European Mortgage Federation to find out what the impact of the Directive would be on the UK, and has a number of questions that it believes the Government must consider in relation to the Directive as part of ongoing negotiations at EU level.
The UK mortgage market has distinctive features, such as its large buy-to-let sector, and there is not at present a significant level of cross-border mortgage lending. Given that the UK market is already well-regulated, the Committee believe that the Directive should be drafted so that greater protection is given to EU markets that need it without placing extra regulatory burden on those that don’t.
The Financial Secretary to the Treasury is asked whether current proposals provide for this balance and how important consumer protection is.
The Committee also ask for an update on the FSA’s Mortgage Market Review and feel that it is essential that the FSA pay due attention to the Directive in order to avoid a dual regulatory burden for UK providers.
The letter also reflects concerns about the Commission’s proposals on the provision of information and advice, and on passporting and the role of mortgage intermediaries. It also considers the likelihood of a more developed single market for mortgages being brought about in the longer-term.