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EC directive to cost up to £554m

The European Commission estimates the rules contained in its responsible lending and borrowing directive will cost between £336m – £554m to implement for all member states, with ongoing costs of between £236m – £290m.

But it says the benefits of the total package of measures will be between £1.1bn and £1.7bn.

Under the new rules, the EC states lenders and brokers must issue a European standardised information sheet to allow consumers to easily compare mortgages between different providers, therefore replacing the key facts illustration.

It also requires brokers to declare whether or not they are a tied adviser and how much they will charge for advice. For whole of market advisers, customers must be told about the presence of commission and how that might be.

Building Societies Association head of mortgage policy Paul Broadhead says the proposals will place unnecessary costs on the industry for little benefit.

He says: “The requirement for a European Standardised Information Sheet, with prescribed content and layout could burden the industry with costs running into tens of millions of pounds.  This is unlikely to deliver any benefit to UK consumers as they will receive less information than they currently receive through the KFI.”

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