The FSA has expressed concerns about various proposals from Europe on future regulation of the mortgage market, including plans to enforce whole of market mortgage advice.
Speaking at the Council of Mortgage Lenders’ annual conference today FSA director of conduct policy Sheila Nicoll (pictured) welcomed the fact that the European Commission had recognised the benefits of diverse national mortgage markets, but said there were aspects of the EC’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: “A further concern of ours, which we know many lenders share, relates to who can give consumers advice. As first drafted, 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 around 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 added: “Consumers should, of course, be able to opt for whole of market advice, an option taken up by more UK consumers than in any other member state. But the advice provided by lenders and intermediaries still forms an important service, which the directive will prevent unless changes happen.”
Nicoll 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.
“This means that consumers who do not want these features still end up paying for them. We think that the introduction of these rights will ultimately limit flexibility and choice for consumers.”