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&#39Euro double whammy would bring chaos to mortgages&#39

The Council of Mortgage Lenders is warning of “regulatory chaos” if the European Union&#39s consumer credit directive is allowed to “drive a coach and horses” through the FSA&#39s plans.

The directive is on its way to becoming European law although there is no set timetable. The CML says it would severely constrain the UK mortgage market, potentially wiping out flexible mortgages, which account for about 20 per cent of lending, and also hitting equity release and remortgaging.

The CML says while it welcomes the Treasury&#39s timetable announced last week for mortgage and general insurance regulation to fall under the FSA&#39s remit from October 7, 2004, it wants all mortgages to be removed from the EU directive&#39s scope as it is concerned that the “double whammy” of FSA and European regulation would be too much for the industry to cope with.

CML director general Michael Coogan says: “It would be unacceptable for the mortgage industry to go through a big bang of statutory regulation in 2004, only to go through similar comprehensive structural change in a couple of years under a Euro-pean directive. The double whammy simply would not be justified in terms of consumer protection terms.”

Independent mortgage expert Mark Chilton says: “I think the CML is right to bring this up. We have got to work far harder to get regulation into a decent shape over here in the next 15 months and also lobby Europe to make sure that its regulation makes sense.”

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