But the CML warned that it will only work in practice if all mortgages are removed from the scope of the draft Consumer Credit Directive currently beginning its passage to becoming European law. Otherwise there is a risk of regulatory chaos, because the directive would drive a coach and horses through the UK’s new regulatory regime for mortgages.
The CML supports the overall approach that the UK government is taking to mortgage regulation. This approach recognises the central importance of clear information to consumers, and gives them access to advice where they require it, without stifling either consumer choice or lenders’ ability to offer innovative, flexible products. By contrast, the draft Consumer Credit Directive would severely constrain the UK mortgage market. It would require advice to be given in every case, as well as removing lenders’ ability to offer flexible mortgages.
Michael Coogan, CML director general, commented: “It would be unacceptable for the mortgage industry to have to go through a "big bang" of statutory regulation in 2004, only to go through a similar comprehensive structural change within a couple of years under a European Directive. The "double whammy" simply would not be justified in consumer protection terms. We urge the UK Government to make the most strenuous efforts possible to ensure that the carefully laid plans for UK mortgage regulation in 2004 are not derailed by the Directive.”
