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EC could control mortgage regulation in UK

The FSA is warning there is a real risk that all UK mortgages will fall under the remit of the European Commission from 2006, usurping its own role in mortgage regulation.

Speaking at the Council of Mortgage Lenders&#39 annual conference in London this week, FSA high-street firms director Sarah Wilson said “there is a significant chance” that the European consumer credit directive will be extended to cover more than just equity release and remortgaging.

If implemented, the directive will force lenders to ensure that borrowers are able to repay loans and advice will become compulsory on all sales. Wilson said the result will be that “everything the FSA has been asked to regulate would fall under Europe&#39s remit”.

Also speaking at the conference, CML senior policy adviser Kate Main warned the EU holds a strong misconception that the UK does not comply with the voluntary European code of conduct, which could lead it to bring mortgages under the directive. Main says: “The UK cannot vote against it. If it goes through, it goes through and everything has to be implemented.”

Wilson said: “When the draft directive is compared with the UK&#39s CP146, there is a very different view of the delivery of regulation. The directive wants compulsory advice and less product disclosure. The Government wants something nearer CP146.”

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