The hefty 136 page document was released today and outlines the final agreed text for the directive. This will be voted on in July and – if passed through parliament – implemented in the summer of 2015.
The United Kingdom, led by Conservative MEP Vicky Ford, won opt-outs in several key areas as part of the agreement.
The buy-to-let market will remain clear of the new rules while other exemptions have been secured for packaged products, including guarantor and offset mortgages.
While it is right that a well-developed market like the UK should be allowed to exempt itself from some parts of the legislation, it does fundamentally undermine the point of creating such a set of rules in the first place.
One example is the European Standardised Information Sheet (ESIS). A key pillar of the legislation, it will see all mortgage customers given clear information on the terms of each product before they sign up – something which already exists in this country in the form of a Key Facts Illustration.
The UK will still have to employ the ESIS eventually but has been given a five-year grace period. This means it will be 2020 before it is implemented and by that point the whole directive will be up for review and subject to change anyway.
The large number of opt-outs have made the directive virtually irrelevant to our market and other member states seem unhappy with the final product. Austria has complained that the new rules will increase costs significantly while offering little benefit to consumers.
The fact the lengthy document mentions the word ‘fairness’ just once and ‘consumer’ on a single occasion suggests that they are correct.
Latvia and Luxembourg also voted against the final text because they believe it has has failed to achieve its main aim – creating a functioning single market with equal consumer protection in each state. A joint statement calls the directive a ‘missed opportunity’.
“Both professionals and consumers stand to lose as a result of this text which has no added value,” the two nations added.
It’s hard to disagree with that.
