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EU Mortgage Directive

Posted by Admin on 2013-10-04 18:03:52 BST

The FCA delivered a presentation outlining the key points of the directive at the Financial Services Expo earlier this week.

 Due to the comprehensive regulation in place in the UK the directive will mainly affect lenders, but brokers may be forced to make additional declarations under the new rules.

The European Parliament is expected to pass the directive in a vote later this year. From that date the UK will have just over two years to comply with the new rules.


Addressing brokers and lenders at the Financial Serices Expo in London, the FCA said brokers who received proc fees would have to offer clients details of all payments they could receive if asked.

Considering how brokers would be able to compile such information the FCA's spokeswoman said: “It’s the sort of information that sourcing systems will have so maybe there’s a solution there. We are hoping we can work together with the market to form of pragmatic and sensible approach to this.”

Any mortgage offers made by lenders will become legally binding meaning that unless fraudulent activity is discovered, a mortgage offer cannot subsequently be withdrawn. It is thought this will result in lenders demanding more information from brokers and could slow down the mortgage application process.

Consumers will also be allowed a seven day cooling off period either immediately before or after the contract any mortgage contract is signed.

Lenders will also be forced to display a ‘worst case' APR on all mortgage literature, highlighting the highest rate the mortgage has been in the past two decades. It is still unknown how this will affect lenders who have been active in the market for less than 20 years.

The FCA is planning a consultation on the implementation of the directive and the UK will be allowed a grace period before replacing the Key Facts Illustration with the European Standardised Information Sheet.