Ten-day cooling-off period for mortgages being considered
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The European Commission could introduce a 10-day cooling off period for all mortgage contracts, says the Council of Mortgage Lenders.
In its News & Views newsletter, the CML says the EC is considering replacing the Key Facts Illustration with a European Standardised Information Sheet which could include a cooling-off period.
The CML says: “We understand that the Commission is considering a compulsory 10-day reflection period after the ESIS is given out for shopping around.
“As the majority of loans in the UK are arranged by mortgage brokers, whose job is to shop around for the customer across the market, this again adds no value in the UK context.”
It says the EC wants to encourage borrowers to look at loan providers from other countries underpinned by rules about how product information is presented across Europe.
It adds: “If the ESIS is now made a prescribed requirement across Europe, this will require amendments to, or replace, the KFI.
“This would have significant business costs but no obvious benefit to UK consumers as the information in each is broadly the same although ordered differently.”
The CML says the EU could also impose new rules relating to mortgage underwriting.
The Financial Stability Board - the international co-ordinating body for national financial regulators and authorities in the interests of financial stability, wants feedback on residential mortgage underwriting practices by October 25.
The CML says: “So we have new rules emerging nationally in the UK, across Europe as a whole, and now apparently also globally on mortgage underwriting.”
It is urging the EC to take a cautious approach in pressing ahead with its proposals. It says in the UK there are real risks of detriment for the industry and borrowers by pursuing national and European regulatory reform at the same time.
It wants the EC to have compelling evidence of the need to intervene to protect consumers and carry out an impact assessment of what it intends to do.
The CML adds: “Until the draft proposal is published in 2011, we do not have the EC’s evidence base, but we are unconvinced that problems in a few countries, such as the UK justify a measure which will impact across Europe even in markets where is no evidence of irresponsible lending or borrowing.”
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Readers' comments (21)
Calvin Oram | 22 Sep 2010 4:50 pm
They all need handbagging!
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Dave | 22 Sep 2010 4:51 pm
Cooling off period?
Simple question - Why?
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Anonymous | 22 Sep 2010 5:01 pm
I think you mean tea-bagging lol
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Robin Banks | 22 Sep 2010 5:02 pm
That's better than the current position, my clients have been cooling off for three years!
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George Williamson | 22 Sep 2010 5:03 pm
If introduced, the ESIS would then require a major change in the legal system in Scotland, as it is usual to "Conclude Missives" within 2or3 weeks and move in with 4or5 weeks. We have enough trouble getting the Loan Offer issued in time to Conclude Missives, never mind adding a 10 Day Cooling off period. I would suggest that we have a 10 YEAR COOLING OFF PERIOD for all these nonsense regulators.
If anybody from Europe would like to spend a day with me learning about mortgages, they are more then welcome to use their GRAVY TRAIN EXPENSES to come & vist me in Glasgow - I will provide my time free of charge!
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john | 22 Sep 2010 5:05 pm
This will have the banks emptying their bowels - lets go for it
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Steve Wentworth | 22 Sep 2010 5:08 pm
This will be due to the large percentage of mortgage cases going into arrears and further repossession in the first 10 days. Seriously what is this going to achieve? It takes more than 10 days from receiving a mortgage offer to completion on a purchase anyway even with the most efficient conveyancers.
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William Kingsley | 22 Sep 2010 5:17 pm
It would have a major negative impact on the housing market and also on the way lenders do business. The repossessions market would be in turmoil as would any purchase at auction with a mortgage. It would be a nightmare not worth contemplating.
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Anonymous | 22 Sep 2010 5:23 pm
Typical bureacracy gone mad! It takes three months on average to buy a house, what difference will ten days make.
Lunatics and Asylum spring to mind...
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Anonymous | 22 Sep 2010 5:33 pm
Hmmmm....are you sure this isn't an FSA idea? Sounds like the sort of idiotic nonsense they would come up with.
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