European regulation could damage UK market, warns IMLA

The Intermediary Mortgage Lenders Association has called for Europe to adopt a principles-based approach to the regulation of the mortgage industry to avoid damaging markets that are more developed such as the UK.

The trade body is launching its briefing paper on the European Commission’s mortgage directive and is urging the EC not to impose restrictive regulations that damage national markets which are developing at different rates and in different ways.

IMLA argues that the UK has one of the largest and most sophisticated mortgage markets of all the EU member states, particularly in terms of intermediated distribution.


Peter Williams, executive director at IMLA, says his association is concerned that any EC directive could cut across the progress that has been made in the UK to reform the mortgage industry in recent years.

He says: “It is essential that there is sufficient national discretion to allow UK reforms to be accommodated within the EU framework.”

Williams also stresses that housing and mortgage markets in different EU countries show significant disparities in culture and scale.

He says: “Whilst providing baseline guidance on consumer protection, IMLA would argue it is important that the directive does not impose solutions that damage national markets which are developing at different rates and in different ways.

“We would therefore favour a high-level principles-based approach that does not result in duplication or additional costs where significant progress has been made with consumer protection in individual markets as has been the case in the UK.”

On specific measures included in the EC directive, IMLA holds the position that to introduce a European Standardised Information Sheet would be of little value to consumers and would cost lenders millions of pounds if they had to change their systems to introduce it.

IMLA also says that it does not believe the directive is an appropriate vehicle for the regulation of commercial lending markets, in particular the UK private rented sector.

This is because it says other EU markets differ significantly in the mix of tenure and structure of rental markets.

IMLA says: “The UK market is relatively small but needs to expand quite rapidly to meet an expansion in demand being driven by a wide range of social economic and demographic factors.

“The inappropriate regulation of buy-to-let therefore as a consumer rather than commercial activity risks imposing constraints on the market that are not warranted and will have serious impacts upon the supply of property to the sector.”