In theory, EU integration could result in more choice for consumers as lenders from a variety of countries vie for business from domestic and overseas borrowers. In reality, there are many hurdles to overcome before this becomes anything like reality.There isn’t yet agreement on what European mortgage integration is, let alone how it would work. For example, does it mean the same range of products should be available in all states at the same price or is it that lenders should be willing to loan funds in all states on the same terms? There is wide variation in legal practices and home buying regulations across the EU, which could be a minefield for borrowers. Any sort of legal harmonisation across member states would be hard to achieve and probably result in a long and complex process at a high cost. What is more likely is that there will be commonly accepted standards and rules so there would at least be a more consistent approach to lending and conveyancing. Santander and Abbey are leading the way with European integration, which has the benefit of meeting cross-border needs and facilitates the transfer of knowledge from country to country. A pan-European capability results in faster innovation, the ability to replicate products across markets and enhanced customer service. For example, Abbey recently launched a range of euro mortgages for UK borrowers buying properties in Spain. The mortgages are underwritten in the UK and processed in Spain, taking advantage of cost synergies across Abbey and Banco Santander. While the barriers to market entry are not likely to come down overnight, market integration will be led by pan-European banks with integrated operations. This should mean more competition and bring savings to consumers in Europe. At the risk of sounding like a politician, the answer here depends on what the question means. If it means making it easier to do business in different member states the answer is yes. If it means standardising consumer protection in a vain attempt to encourage unpopular cross-border shopping, no. The problem is that the European Commission is seeking the Holy Grail of integration without knowing what it looks like. Because the Commission has so far failed to define integration it cannot quantify its effects. There are many differences between EU markets. The most important ones to tackle – to enable lenders to operate in different member states – are the huge variations in access to credit data about borrowers, land registration systems and mechanisms to take possession of property. But these are not areas in which the Commission is showing much interest. Given that the Commission is supposedly in listening mode it is bad news that it has brought forward its anticipated publication date for firmer proposals, from October 2006 to spring next year. This decision rather implies that the Commission has already made up its mind about how to proceed despite the current consultations. The cost-benefit analysis undertaken for the Commission by London Economics indicated that this country would be the only net loser among EU member states from the raft of mooted integration measures. This is cruelly ironic given that the aim of the exercise is essentially to get the other European mortgage markets to look more like that in the UK. In short, the Commission should reflect. It ignores the views of Europe’s most efficient market at its peril.
The Mortgage Business says it has made significant improvements to its service standards. TMB will now operate extended opening hours from 8am until 6pm Monday to Friday, fax options available for urgent Direct Debit instructions and declarations (on 01244 693 581) and streamlined telephone systems have been put in place to help brokers and packagers […]
The Council of Mortgage Lenders has pledged its support to the government’s plans to extend home ownership. In his introduction to the CML annual conference, Stuart Bernau, chairman of the CML and commercial and communications director at Nationwide, told listeners that targeted intervention is welcome but only if it delivers real benefits to consumers. These […]
Pink has revealed the winner of its 8th 1000 index survey prize draw is Frank Hadley from Oak Financial in Stevenage.Hadley was independently selected from the intermediaries who took part in Pinks 8th survey and will receive 250 worth of gift vouchers.The 8th survey ran from November 22 until December 2 and included questions related […]
From Guy Garrard Since the dark uncertain days of November 2004 and the advent of the new world of regulation there has been something nagging at the back of my mind about our world of transparency and Treating Customers Fairly. It’s been there now a year and the nagging is now reaching spouse-like proportions. Quite […]
Well, the cricket season is here, and England and Australia are stepping up to the wicket. Although we compete with each other in the sporting world, when it comes to pensions, Australia’s pension programme is held up as a model for our auto-enrolment initiative. Auto-enrolment was introduced because people weren’t saving enough into their pensions, and it is still early days but signs are positive. However, in Australia, saving into a pension is compulsory, and in fact employers are the ones who have to pay in. Employees in Australia can make additional contributions into their pensions, but they don’t have to. Should the onus be on the employer or employee to save? Well in the UK we think it’s both, but to get ‘adequate’ savings for retirement it’s the employee who has to pay more in.
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