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EC: Brokers must provide new standardised information sheet

Lenders and brokers will be required to issue a European standardised information sheet to allow consumers to easily compare mortgages between different providers under new draft rules announced by the European Commission.

As part of its responsible lending and borrowing directive, published today, the EC will require lenders and intermediaries to provide information to the borrower on mortgage offers, including the mortgage rate plus whether it is fixed, variable or both, the duration of the mortgage, the total size of the loan and the amount payable by the consumer. The Esis will replace the key facts illustration.

It has proposed member states ensure an agreement cannot be concluded until the borrower has had “sufficient” time to compare offers.

The directive also sets out various disclosure requirements for intermediaries. The directive says advice can only be marketed as advice when the remuneration of an intermediary is transparent to the borrower, including what fees and commission brokers receive. Tied intermediaries must tell the customer they do not have access to the whole market.

All brokers must also make customers aware of any fee they might charge for advice and whole of market brokers must disclose the varying levels of commission paid by different lenders.

Under the proposals, lenders and brokers will both have a role in assessing whether a borrower is “credit worthy”, based on the information supplied, by obtaining the “necessary information regarding the consumer’s personal and financial situation”.

Lenders will also be forced to disclose to customers why their application has been rejected and must make their early repayment charges “fair and objectively justified”, but the directive does not give any further specific requirements on ERCs.

The EC estimates the total one-off and ongoing costs of the measures for lenders, intermediaries and member states are in the range of £336m – £554m and £236m – £290m respectively.

Internal market and services commissioner Michel Barnier says: “The draft set of rules presented today is designed to ensure a high standard of pre-contractual information and improved lending practices across Europe, while promoting a dynamic, competitive and more integrated single market for mortgage credit.”


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There are 16 comments at the moment, we would love to hear your opinion too.

  1. What a load of cobblers. We do this anyway in the UK. Just think of the amount of money that will be wasted by just changing one or two words in the documentation already being used. We cannot afford the FSA and this mob leeching of the industry with their nice salaries and expenses etc. Someone needs to stand up to this lot its like Dick Turpin stealing from the public in the past, the difference is they think this is legal and they can get away with it. I do not know of any other industry who has outside interference the same as the financial services. FSA, FOS, FSCS, Office of Fair Trading, Which,
    and many others.

  2. excellent! Just what the industry needs. More paperwork (not!)

  3. Not all going Hector Sants way then!

  4. Next they will want us to pay their monthly premiums !!!

  5. Alastair Clarke 31st March 2011 at 1:07 pm

    I don’t see how this is going to improve on the KFI Document which in my view is one of the clearest and most comprehensive documents in the Financial Market. It’s another example of overpaid,inexperienced civil servants in the EU issuing directives like their last one on Life covers

  6. Dazed and Confused 31st March 2011 at 1:13 pm

    There are so many things wrong with this, I don’t even know where to begin. I did like the part about an adviser having a role to play in assessing a clients’ creditworthiness. That’s amusing. I therefore deem myself worthy of borrowing £2M, and do not deem my brother worthy of borrowing anything until he has paid me back that £50 he borrowed from me in 2007.

    What nonsense.

  7. @dazed and confused: my colleagues and I are still laughing at your comment!
    Thank God some of us still have a sense of humour!

  8. Just when you thought regulation couldn’t become more burdensome and unnecessary than it already is !

    If this doesn’t kill off mortgage brokers, nothing will.

    I, for one, will stop giving mortgage advice – it isn’t worth the aggravation now. I bet the banks are rubbing their hands together knowing that they’ll be able to continue ripping off the unsuspecting !

  9. Yet more jargon to confuse the consumer, new acronymns and abbreviations dreamt up by over paid jobs worths in the EU, if the KFI works and people understand what it is, leave well alone where change is not needed.

  10. PIFFLE………

  11. £336m – £554m and £236m – £290m respectively! I would love to meet the one responsible for calculating this cost to the industry,

    Could you imagine being allowed to tell a client that his mortgage may cost up to 60% more than the lower figure projected?

  12. Incredibly Flumuxed Adviser 1st April 2011 at 9:16 am

    At last the FSA do something sensible. A definate improvement to update outmoded confusing documents. I am MORE than happy to absorb the costs. Bring on RDR. More qualifications. Why whould consumers pay for advice!!! FSA all the way.
    Happy April 1st people.

  13. Have they seen a KFI?? What a joke.

  14. I have just been able to access this, thought it was an April fool! but no! the bureacrats must be revisiting old MCCB guidlines how original.

  15. There must be a EU”APRIL Fools” Day joke
    I HOPE.

    Save us ALL from more rules

  16. I’m beginning to feel more and more like a dodo every day…….I concur with Bill Wells, lets just stop giving any Mortgage Advice and leave the banks to it!
    Its taking 3 times as long to process every application nowadays due to their incompetences and their 1 excuse fits all ‘due to unprecidented volumes of business our normal services standards are not being met…blah.. blah…blah… but please do stay on hold on our premium rate numbers and listen to our annoying recorded voice…’ I wish I knew where this level of business is coming from so I could dip into it too…

    IF they could only stop paying oversized bonuses and start employing some competent staff at the front end, things may be looking up.
    Rant over, that feels much better!

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