The Council of Mortgage Lenders (CML) has warned the European Commission may yet draft a mortgage credit directive despite its successful effort to keep secured loans out of the forthcoming Consumer Credit Directive.
Speaking at the CML annual lunch, Stuart Bernau, chairman of the CML, said:
”We may still have intervention from Europe. However, a mortgage credit directive would not be drafted until 2006 and would not be implemented until late 2008 or 2009.”
Bernau also highlighted those issues the CML considers will be the most pressing for UK lenders to deal with during 2005.
While welcoming the outcome of the Financial Services and Markets Act review of the Financial Ombudsman Service (FOS) and FSA rules in dealing with wider implication cases, he added the new processes "remained largely untested".
Bernau pointed out the transition costs of regulation had been far higher than forecast and may have even been double what most had initially believed they would be, saying the breadth of activity and requirements of regulation were felt most by smaller firms.
“We will therefore be taking a close interest in the FSA study of the costs of regulation that they are undertaking this year,” he added.
The CML chairman also called for any review of Mortgage Conduct of Business (MCOB) rules to take place only after regulation has had time to settle down.
“We do not believe that it is right to put the industry under further scrutiny only a year after Mortgage Day," Bernau said, adding he believed any review of MCOB rules could wait until 2006.
Bernau also recognised the mortgage industry still had more to do referring to key fact illustrations and noting that some lender’s KFI’s were four times longer than those of other lenders and questioning whether they needed to be so complicated.
He also revealed mortgage interviews now take up to half an hour longer to conduct as a result of regulation which he said was not customer-friendly.
And he also admitted there was no sign a standard disclosure of product detail had changed consumer perceptions or behaviour in terms of shopping around for a better deal.
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