In its News & Views newsletter, the CML says the EC is considering replacing the Key Facts Illustration with a European Standardised Information Sheet which could include a cooling-off period.
The CML says: “We understand that the Commission is considering a compulsory 10-day reflection period after the ESIS is given out for shopping around.
“As the majority of loans in the UK are arranged by mortgage brokers, whose job is to shop around for the customer across the market, this again adds no value in the UK context.”
It says the EC wants to encourage borrowers to look at loan providers from other countries underpinned by rules about how product information is presented across Europe.
It adds: “If the ESIS is now made a prescribed requirement across Europe, this will require amendments to, or replace, the KFI.
“This would have significant business costs but no obvious benefit to UK consumers as the information in each is broadly the same although ordered differently.”
The CML says the EU could also impose new rules relating to mortgage underwriting.
The Financial Stability Board – the international co-ordinating body for national financial regulators and authorities in the interests of financial stability, wants feedback on residential mortgage underwriting practices by October 25.
The CML says: “So we have new rules emerging nationally in the UK, across Europe as a whole, and now apparently also globally on mortgage underwriting.”
It is urging the EC to take a cautious approach in pressing ahead with its proposals. It says in the UK there are real risks of detriment for the industry and borrowers by pursuing national and European regulatory reform at the same time.
It wants the EC to have compelling evidence of the need to intervene to protect consumers and carry out an impact assessment of what it intends to do.
The CML adds: “Until the draft proposal is published in 2011, we do not have the EC’s evidence base, but we are unconvinced that problems in a few countries, such as the UK justify a measure which will impact across Europe even in markets where is no evidence of irresponsible lending or borrowing.”
