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FSA warns of effects of Europe loan proposals

The FSA has expressed concerns about a range of proposals from Europe on future regulation of the mortgage market, including plans to enforce whole- of-market
Speaking at the

Council of Mortgage Lenders’ annual conference last week, FSA director of conduct policy Sheila Nicoll said there are aspects of the European Commission’s mortgage market proposals that “caused the FSA difficulty”.

Nicoll said the level of detail and disclosure being proposed by the EC for advertising and generic material risks “information overload” and key points being “lost in a deluge of other information”. She is also concerned about consumers being forced to take whole-of-market mortgage advice rather than having it as an option to choose from.

Nicoll said: “The European proposal means that only those firms who look across the whole of the market can give advice. We think this is a much too narrow view.”

Nicoll says about half of UK borrowers who take out a mortgage directly with a lender benefit from the lender giving advice on the best product in their range and borrowers also benefit from advice from brokers who offer a limited range of products.

She also highlighted concerns about proposed powers for the EC to impose additional requirements on the mortgage market at any time, risking “constant and costly change” and causing detriment to firms and consumers.

She criticised Europe’s plans to impose certain consumer rights on all mortgages, such as the ability to convert a foreign currency loan into a consumer’s home currency, the ability to port a mortgage and to underpay or overpay and the right to transfer a mortgage to another borrower. Nicoll said: “In our view, it is one thing for consumers to opt to have these features and to pay for them. It is another for these features to become rights and to be forced on all consumers.”



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